US embassy cable - 02ANKARA8635

UNCLAS SECTION 01 OF 02 ANKARA 008635 
 
SIPDIS 
 
 
TREASURY FOR OASIA 
STATE FOR EB/TPP/MTA/IPC - JURBAN AND EUR/SE 
DEPT PLEASE PASS USTR FOR DBIRDSEY/KALVAREZ 
DEPT PASS PATENT AND TRADEMARK OFFICE 
USDOC FOR ITA/MAC/DDEFALCO 
 
 
SENSITIVE 
 
 
E.O. 12958: N/A 
TAGS: ETRD, KIPR, TU 
SUBJECT:  Update on Intellectual Property Protection 
 
Summary 
------- 
 
 
1. (SBU) Econoff discussed intellectual property and 
market access priorities with American pharmaceuticals 
companies and with the copyright-based industry 
associations in Istanbul.  The drug companies agreed 
that they need to make the case with the new Turkish 
Government on data exclusivity.  With the objective of 
refuting GOT and generics producers' arguments that data 
exclusivity is too expensive to implement, Eli Lilly has 
prepared detailed estimates of the cost of this policy 
to the Turkish Government (approximately USD 3 million 
annually).  Organizations representing the motion 
picture, music and software industries continue to 
identify enforcement as their main concern.  Some 
interlocutors believe the new government will be more 
receptive to their concerns, and these industries plan 
to call on new policymakers in the near future.  End 
Summary. 
 
 
2. (U) Econoff met with representatives of U.S. 
pharmaceuticals companies and the U.S. copyright-based 
industries in Istanbul on November 21 and 22 to discuss 
developments in intellectual property protection and 
market access.  Econoff met with the pharmaceuticals 
companies as a group, which included Eli Lilly, Pfizer, 
Bristol-Myers Squibb, Wyeth, Abbott Laboratories, Merck 
Sharp & Dohme, Schering Plough, Pharmacia Upjohn, 
Janssen Cilag (Johnson and Johnson).  We also held a 
group discussion on problems facing the copyright 
industries with Erol Ozkur, Anti-Piracy Marketing 
Manager, Microsoft/ Business Software Alliance (BSA); 
Nasser Ali Khasawneh, Vice President, BSA; Baha 
Ozyukseler, General Manager, AMPEC/ MPA (film industry); 
Nilufer Sapancilar, General Manager AMPEC; and Daghan 
Baydur, Chairman of MSG (composers/songwriters). 
Econoff met separately with Mehih Ayracman, Sony Music 
Managing Director and Board Member of MUYAP (Musical 
Work Producers Society). 
 
 
Drug Companies on Data Exclusivity, Price Discrimination 
-------------- 
 
 
3. (U) In their roundtable meeting at the U.S. Consulate 
on November 21, the pharmaceuticals firms did not, in 
depth, address the question of reversing GOT cost-saving 
measures in the health and pension funds favoring 
reimbursement of generic drugs.  The discussion focused 
primarily on data exclusivity and price controls and how 
to address these issues with a new GOT.  Ahmed Esen, 
Pfizer's General Manager, and Roberto Giusti, Eli 
Lilly's General Manager, dominated the discussion. 
 
 
4. (U) Data Exclusivity:  Roberto Giusti and his 
Corporate Affairs Manager Sebnem Kocaalp made the case 
that GOT implementation of data exclusivity would cost 
the Turkish treasury as little as USD 3 million annually 
in the form of higher reimbursements for pharmaceuticals 
covered by the health and pension funds, well below the 
USD 1 billion cost estimate promoted by Turkish generic 
drugs manufacturers.  Lilly presented a detailed in- 
house analysis to back up its estimate.  Other U.S. 
companies responded very favorably to Lilly's analysis 
and discussed various options for presenting it to the 
GOT, including commissioning an independent study 
through a Turkish university. 
 
 
5. (U) Price Discrimination:  There was less consensus 
on the need to press the GOT on price controls, and even 
on whether the controls discriminated against imports. 
Ahmed Esen, Pfizer's General Manager, argued that the 
entire system of price controls, for both local and 
imported drugs, was not transparent and needed reform. 
He suggested that a study be commissioned to examine the 
impact of price controls on imported and local products. 
Giusti contended that current price/margin controls were 
clearly discriminatory, and noted that the European 
pharmaceuticals industry association had examined the 
issue and would report its conclusions in the near 
future.  Roundtable participants were in general 
agreement that the current margin control system, which 
encourages companies to inflate costs to obtain 
government approval for price increases, depresses 
reported profits and tax payments by the industry. 
Copyright Industries Focused on Improving Enforcement 
--------------------------------------------- -------- 
 
 
6. (U) Representatives of the motion picture, music and 
software industries maintained that small-scale street 
sales of pirated material are the leading problem, 
though they disagreed as to the adequacy of the GOT's 
response.  Microsoft and BSA representatives opined that 
the recently-formed, multi-agency inspection and control 
committees for copyright products were functioning well 
in the Istanbul region, which accounts for two-thirds of 
Microsoft's sales in Turkey.  In a separate meeting, 
Melih Ayracman, Sony's Managing Director told Econoff 
that the committees existed largely on paper, and were 
not equipped with appropriate tools (support staff, 
vehicles) to fulfill their functions.  Ayracman also 
raised the continuing problem of broadcast piracy. 
MSG's Chairman told Econoff that delays and sometimes 
uneven judgements from the Turkish judiciary were a 
serious barrier. 
 
 
7. (U) Our interlocutors were cautiously optimistic that 
the new GOT would take IPR protection seriously, and 
they discussed making a coordinated approach to key 
ministers and other officials in the near future.  Baha 
Ozyukseler, of AMPEC, said it would offer to organize a 
conference for judges and prosecutors on copyright 
enforcement in the spring.  AMPEC pointed out that one 
of the new government's first appointments was that of 
Fikret Uccan, formerly Undersecretary in the Culture 
Ministry, to the position of Undersecretary in the Prime 
Ministry.  Ozyukseler opined that this might raise the 
profile of IPR issues overall in the next GOT. 
 
 
Comment 
------- 
 
 
8. (SBU) Given the new government's interest in 
attracting more foreign investment, we intend to 
emphasize the link between improved IPR protection and 
U.S. companies' willingness to maintain or increase 
investments in Turkey.  Pearson