US embassy cable - 05TELAVIV2338

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 002338 
 
SIPDIS 
 
FOR NEA/IPA GLOGERFO AND EB/IPE SWILSON AND AADAMO 
DEPARTMENT PLEASE PASS TO USTR ESAUMS AND BPECK 
DEPARTMENT PLEASE PASS TO USPTO JURDAB 
USDOC FOR 4520/MAS/ANESA/HVINEYARD 
USDOC FOR 4521/MAC/ANESA/CLOUSTANAU/NWEIEGLER 
USDOC FOR 3131/USFCS/OIO/ANESA/DHARRIS/GLITMAN 
 
E.O. 12958: DECL: 04/13/2015 
TAGS: ETRD, KIPR, IS, ECONOMY AND FINANCE, LABOR AND COMMERCE, U.S.-ISRAEL RELATIONS 
SUBJECT: GOI TO MOVE FORWARD WITH PATENT TERM EXTENSION 
LEGISLATION 
 
Classified By: Charge d'Affaires Gene A. Cretz for reasons 1.4 (b) and 
(d) 
 
1. (C)  Summary.  On April 13 local research-based 
pharmaceutical representatives expressed concern about GOI 
intentions on the issue of patent term extension legislation. 
 The representatives said that they considered the 
patent-term extension (PTE) roll-back as direct compensation 
to the generic industry for their acceptance of the recently 
approved marketing exclusivity legislation.  The industry 
representatives informed us that contrary to previous GOI 
statements, the GOI was planning action on Patent Term 
Extension (PTE) legislation in the next session of the 
Knesset.  Post subsequently confirmed with the GOI their 
intention to move ahead with PTE legislation in May.  End 
summary. 
 
---------------------------- 
1 Step Forward, 3 Steps Back 
---------------------------- 
 
2. (C)  In an April 13 meeting with local representatives 
from research-based drug companies Merck and Pfizer and the 
local representative of Pharma (PhRMA), Econcouns and Econoff 
spoke at length about the passage of the marketing 
exclusivity legislation by the Knesset, and the pending PTE 
legislation.  While admitting that the adoption of marketing 
exclusivity was an improvement in the protection of IPR in 
Israel, the reps told Econoffs that the marketing exclusivity 
legislation will affect only 3% of their products.  In 
contrast, they estimate that more than 90% of pharmaceutical 
products will be affected by the PTE legislation.  In a 
discussion on the impact of the recently passed marketing 
exclusivity law, the representatives were unable to predict 
if the law would deter new pharmaceutical products from being 
launched in Israel.  However, all agreed that a generation of 
products developed before the implementation date of 
marketing exclusivity (July 1, 2005) will likely not be 
introduced in the Israeli market. 
 
----------------- 
So What is a PTE? 
----------------- 
 
3. (C)  The representatives provided background information 
regarding the PTE legislation.  First adopted in 1998 as part 
of what is commonly known as, "The TEVA Bill" the original 
PTE legislation was based on the U.S. Bolar amendment.  At 
the time the law was adopted, it was intended to balance the 
needs of research based pharmaceuticals with those of the 
generic industry.  Specifically, since generic companies were 
allowed to experiment with molecules that were protected by 
patents, the research based companies were allowed to seek an 
extension of their patent for commercial purposes.  In the 
analysis of the representatives, because patent term 
extensions benefit innovations that are not covered by the 
provisions of the new marketing exclusivity law (such as new 
indications and new formulations) the roll-back of the PTE 
has serious consequences for the ability of research-based 
companies to protect their innovations in Israel. 
 
4. (C)  Econcouns queried the company reps about the de facto 
PTE implementation in Israel.  They maintained that from the 
passage of the law in 1998 until the present time, 
pharmaceutical companies have been able to choose the country 
of reference for their patent term extension request.  Then 
based upon the extension provided in the referenced country 
(for a period of no more than 5 years) the patent is extended 
in Israel.  When the law was passed in 1998 the only country 
with such a patent term extension program was the United 
States (and thus the only possible country of reference). 
Since that time a number of other countries have adopted 
similar provision, but as the U.S. generally provides for the 
most generous extension, it is the reference country of 
choice for companies.  The legal opinion of the patent 
commissioner in July 2003 is therefore de facto a statement 
that the process will continue as currently implemented, 
opined local reps. 
 
------------------------------------------ 
How Many Bills Does it Take to Pass a Law? 
------------------------------------------ 
 
5. (C)  In addition to the legislation that will be submitted 
to the Knesset from the government (based on the ministerial 
decision of September 13, 2004), a private bill sponsored by 
10 members of the Knesset has been introduced.  The texts of 
the two laws are identical.  Yair Shiran, Director of 
International Agreements at the Ministry of Industry, Trade, 
and Labor (MOITL) told Econoff on April 14 that the GOI is, 
"moving forward with the legislation and our plan to clarify 
the patent-term extension."  Shiran claimed that he would be 
surprised if action is taken before Passover (Note: The 
Knesset is already in recess for the Passover holiday and 
will not resume regular session until May 16. End note.) 
Shiran said that the GOI is ready to continue discussion with 
USTR on the law and could make amendments to the legislation. 
 However, Shiran emphasized that the GOI needed to pursue the 
legislation and indicated no intention to delay its 
consideration.  In order to provide a real alternative to the 
duplicate government legislation and private bill, the 
research-based companies have drafted legislation that 
supports the rights of companies to choose a country to 
reference in the application for a PTE.  Thus, they reason, 
the GOI will have to make a clear policy choice and cannot 
simply claim that no alternative plan was offered.  In total, 
three laws on PTE will be considered by the Knesset sometime 
after the Passover recess. 
 
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