US embassy cable - 05BRATISLAVA880

UNCLAS  BRATISLAVA 000880 
 
SIPDIS 
 
 
DEPARTMENT FOR EB/IPE:WILSON 
DEPT PLEASE PASS TO USTR LISA ERRION 
USDOC FOR MICHAEL ROGERS 
USPTO FOR JURBAN 
LOC FOR STEPP 
 
E.O. 12958: N/A 
TAGS: KIPR, ETRD, ECON, XG, LO 
SUBJECT: SPECIAL 301: SLOVAKIA WORKING TO GET OFF THE 2006 
WATCH LIST 
 
REF: BRATISLAVA 161 
 
1. SUMMARY: The Government of Slovakia has held two meetings 
in recent months with pharmaceutical companies and Embassy 
representatives aimed at addressing outstanding Special 301 
issues so that Slovakia can be removed from the USTR "Watch 
List" in 2006.  The relevant GOS ministries are saying the 
right words and have proposed solutions to the two main 
issues - procuring a secure storage facility for sensitive 
registration data and development of a coordination 
mechanism between the Drug Control Office and the Patent 
Office - but need to follow their promises with action.  A 
USTR-hosted DVC in early December would provide a venue for 
USG interlocutors to assess progress to date and encourage 
the GOS to take verifiable steps before decisions are taken 
for the 2006 Special 301 Report.  End Summary. 
 
2. At the urging of the Slovak Embassy in Washington, the 
Ministry of Economy has hosted two "stakeholders" meetings 
(July 8 and October 20) to address the outstanding 
pharmaceutical issues listed in the 2006 Special 301 report. 
The meetings brought together Embassy representatives, the 
Amcham Local Area Working Group (LAWG), which is a 
collection of research-based pharmaceutical companies in 
Slovakia, and the relevant GOS agencies including the 
Ministry of Health (MOH), Drug Control Office, Industrial 
Property (patent) Office, Ministry of Foreign Affairs, Prime 
Minister's Office, Customs Directorate, and Trade Inspection 
Agency. 
 
3. After an initial unwillingness to acknowledge 
inadequacies in its IPR regime, the GOS has come around and 
now recognizes that it must address the outstanding Special 
301 issues before Slovakia can be removed from the Watch 
List.  The "stakeholder meetings" created intra-ministerial 
working groups that have come up with proposals for the two 
key issues outlined in the 2005 report: 
 
STORAGE OF PROPRIETARY DATA: The Drug Control Office (DCO) 
has stored sensitive registration data on the premises of a 
generic drug producer for years.  Minister of Health Rudolf 
Zajac recently promised to provide funds for DCO  to secure 
a storage facility to house proprietary data.  DCO initially 
floated a tender to lease a storage facility, but due to the 
high cost of the bids DCO is now looking to purchase a 
storage facility.  Zajac has promised to finalize the 
transaction by the end of the year, with the goal of moving 
the registration documents to a new facility in 2006. 
 
REGISTRATION OF GENERICS: In several cases over recent years 
the Drug Control Office has approved applications for 
registration by generic manufacturers for drugs that are 
still under patent protection because it has failed to check 
the status of the original patent with the patent office. 
Once a registration is granted to a generic manufacturer, it 
is very difficult for the patent owner to overturn the 
decision or obtain compensation through the courts.  The 
Drug Control and Patent offices have proposed a coordinating 
mechanism to prevent future registrations of unauthorized 
patent-infringing products.  Although LAWG considers this an 
improvement to the status quo, they would like the Drug 
Control Office to notify the patent holder when they receive 
a request from a generic manufacturer to add a degree of 
transparency to the process.  The relevant GOS ministries 
promised during the October meeting to consider the LAWG 
proposal and discuss it with them in mid-November. 
 
4. LAWG is also using the stakeholder meetings to push for 
improvements on non-IPR market access for pharmaceutical 
companies.  They complain that a recent Ministry of Health 
decree (No. 723/2004), which was published in July and went 
into effect on October 15, 2005, further reduces the 
transparency of GOS decisions regarding pricing and 
reimbursement decisions for medicines prescribed by national 
health insurance.  The decree specifies the rules to be 
applied in determining the price of the medicinal product 
and level of reimbursement.  The original decree provided 
detailed rules for calculation of the price and level of 
reimbursement.  However, recent amendment of the decree 
cancelled the detailed rules for determination of the 
reimbursement amount and, instead, provided the Ministry of 
Health with a wide scope of discretion to decide on the 
amount of reimbursement without setting a clear set of 
guidelines for such decisions.  LAWG complains that the new 
regulation increases the subjectivity of the Board's 
decision-making, and thus minimizes the predictability and 
transparency of the process. 
 
 
5. COMMENT: During the October meeting the relevant GOS 
ministries needed less than 45 minutes to agree on proposals 
to address the patent issues that have kept Slovakia on the 
Watch List for several years.  The trick now is to ensure 
that the GOS follows through with verifiable actions before 
final decisions are made for the 2006 report.  As a next 
step we recommend a USTR-hosted  digital video conference 
with the relevant GOS officials (the Embassy will host the 
GOS participants in our DVC facilities) to assess progress 
to date and encourage quick action to fulfill their 
promises.  A DVC sometime between November 28 and December 9 
should provide the GOS with sufficient time to finalize 
negotiations with LAWG, while simultaneously providing a 
large enough window to implement their proposals before the 
2006 301 review. 
 
VALLEE 
 
 
NNNN