This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ISTANBUL 000258 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR EB/TPP/MTA/IPC - JURBAN AND EUR/SE 
TREASURY FOR OASIA - MILLS AND LEICHTER 
STATE PASS USTR - NOVELLI AND BIRDSEY 
DEPT PASS PATENT AND TRADEMARK OFFICE 
USDOC FOR ITA/MAC/DDEFALCO 
 
 
E.O. 12958: N/A 
TAGS: ETRD BEXP KIPR TU
SUBJECT: DIFFERENCES AMONG U.S. FIRMS GIVE RISE TO NEW 
ASSOCIATION OF RESEARCH-BASED PHARMACEUTICAL COMPANIES 
 
 
REF: (A) ANKARA 1275 (B) 02 ANKARA 8635 (C) 02 ANKARA 
     5150 (D) 02 ANKARA 3512 
 
 
Sensitive but Unclassified - not for internet distribution. 
 
 
¶1.  (SBU) Summary: With Turkey's new AK government just 
having marked its hundredth day in office, representatives of 
American pharmaceutical companies indicate they have not yet 
judged the time ripe to raise the intellectual property and 
pricing issues that have beset them in recent years.  Despite 
this, they see some grounds for hope.  Eli Lilly Managing 
Director Roberto Giusti argues that in contrast to its more 
"nationalistic" predecessor, the current government's 
intentions are good, though it has little concept of the 
scale of the issues confronting it in the pharmaceutical 
area.  Giusti argued that advancement of U.S. pharmaceutical 
interests remains hampered by continued divisions within the 
industry.  Differences over the relative weight accorded to 
such issues as prolonging the reimbursement lifecycle of 
older off-patent brands has divided such industry leaders as 
Eli Lilly and Pfizer, with the former joining with 
like-minded companies to form a new "Association of Research 
Based Pharmaceutical Companies" (AIFD) in January.  Now 
completing its registration procedures, the group will make 
an introductory foray into Ankara later this week. 
Meanwhile, Giusti encouraged the USG to continue to host 
regular gatherings of the industry, noting that outside these 
sessions "there is very little dialogue."  End Summary. 
 
 
¶2.  (SBU) A New Association: In a February 27 meeting with 
P/E Chief and Commercial Specialist, Eli Lilly General 
Manager Roberto Giusti (joined midway through the meeting by 
Akzo Nobel General Manager Edward Lysen) outlined the goals 
of the new research-based association (of which he is Vice 
President).  (Note: The Group's ten members make up 20 
percent of the sector, accounting for a significant 190 
million USD in investment in Turkey in the past two years. 
End Note.) They stressed that neither IEIS (the Drug 
Manufacturers Employers' Association) nor TISD (the Turkish 
Drug Manufacturers' Association) makes representation of 
innovation or of research-based interests their top priority, 
and that AIFD aims to fill that gap.  Pointing to "big 
picture" in Turkish healthcare expenditure, Giusti argued 
that while the total is deficient (closer to that of Bulgaria 
than that of Greece), it is also seriously skewed.  Much of 
it, he suggested, is a "subsidy" to domestic industry, in 
that while imported drugs routinely face price 
discrimination, Turkish manufacturers receive reimbursement 
far above comparable world prices for their "copy drugs" (or 
generics).  As a result, cost containment (encouraged by the 
IMF) has targeted new and innovative products, resulting in 
price discrimination against them.  (Thus, vitamins, e.g., 
are subsidized, while new cancer drugs are not.)  Giusti 
stressed that the new association is not overtly seeking an 
end to the subsidies, nor to the reimbursement lifecycle 
issues on which he suggested Pfizer is focused.  Rather the 
group believes these "business interests" should be lower 
priorities than the industry's "legitimate entitlements": 
full implementation of intellectual property rights and the 
discontinuation of disciminatory practices against imports. 
In Giusti's view, the defensibility of the "local subsidy" or 
reimbursement lifecycle is not the key issue; rather the 
issue is their "inappropriateness" at a time when data 
exclusivity is not provided and when price discrimination 
continues to exist. 
 
 
¶3. (SBU) Continued Differences: Giusti noted that the 
association's members are not exclusively foreign, but 
include three Turkish research-based firms.  Founding 
companies include Novartis, Sering AG, Novo, Bayer, Solvay, 
Lundbeck Astrazeneca, Sanofi-Synthelabo, Organon and Lilly. 
Outside the new organization are those with "other 
interests": generic manufacturers, with their vested interest 
in the current reimbursement system, and Pfizer.  (In a 
separate meeting with Pfizer's Pricing Director Feyza Tevruz 
earlier in the month, these differences were only indirectly 
touched upon, with Tevruz noting that Pfizer did not share 
all of Giusti's criticism of the reimbursement system: while 
it agreed the system was "not perfect," it could live with 
it.)  Giusti also expressed frustration with the lack of 
transparency in the GOT's reimbursement decisions, suggesting 
that some other foreign firms had benefited from their access 
to decisionmakers to win special breaks.  Part of the 
problem, he suggested, is a lack of communication within the 
industry, and he encouraged the USG to hold pharmaceutical 
roundtables (like that of late November at the Consulate) on 
a more regular basis.  Lysen echoed the point, noting that in 
his past assignment, roundtables hosted by Embassy Tokyo had 
been extremely helpful in keeping the industry informed about 
developments and on the same page in their advocacy efforts. 
 
 
¶4. (SBU) Still too Early: Giusti and Lysen echoed what Tevruz 
and Pharmacia-Upjohn Country Director Muhittin Bilutay 
suggested earlier in the month: the time is only now becoming 
ripe to press the new Minister of Health on the data 
exclusivity and price discrimination issues, particularly 
given staff changes in the Ministry.  Giusti was hopeful that 
the new government would be more open to the industry's 
position than its predecessor.  The Ecevit government, he 
argued, saw issues through a "nationalistic" prism and was 
predisposed to back domestic industry at the expense of its 
foreign counterparts.  That may not be true of AK: he 
suggested that the government's intentions are "good," but 
that it is not aware of the extent of things that need to be 
changed.  Giusti said he will make an initial trip to Ankara 
this week to introduce the new association and distribute the 
new issue paper it has prepared (copy e-mailed to desk and 
Embassy Ankara).  Bilgutay similarly indicated that the 
industry is just now beginning to raise the price issues that 
have seriously harmed it in Ankara.  The Import subcommittee 
of the Pharmaceutical Manufacturers Association (PMA) planned 
to meet with the Health Ministry's new Director General of 
Pharmaceuticals in mid-February to raise its concerns about 
import pricing, and to determine whether she planned to 
adhere to the action plan her predecessor had adopted to 
address the issue.  Bilgutay stressed the seriousness of the 
situation, noting that regulations that had cut the companies 
margins on imports from 36 to 16 percent (10 percent profit 
and 6 percent cost), when coupled with inflation and lags in 
reimbursement cycles, had seriously harmed the industry. 
 
 
¶5. (SBU) A Tender Trap?: Bilgutey also flagged his concern 
that new tender regulations may apply to purchase of 
pharmaceutical products, putting further downward pressure on 
already low reimbursement prices.  Neither Giusti or Tevruz 
raised this issue, however. 
 
 
¶6. (SBU) Comment: Serious divisions persist among U.S. and 
other international companies active in the Turkish market, 
though there is underlying agreement that intellectual 
property issues need to be addressed, as is reflected in 
PhRMA's latest submission.  Given the positive feedback on 
the roundtable Mission organized in November (the third in 
the past year), we will seek to organize such sessions on a 
regular basis, though perhaps not quite as often as the 
monthly session Giusti suggested.  A goal at some of these 
sessions would also be to encourage dialogue between American 
and Turkish pharmaceutical companies, something the 
American-Turkish Council has also attempted to organize.  End 
Comment. 
 
 
ARNETT