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

261641Z Apr 04

UNCLAS SECTION 01 OF 02 ANKARA 002346 
 
SIPDIS 
 
 
SENSITIVE 
 
 
COMMERCE FOR DEFALCO 
DEPT PASS USTR FOR LERRION 
STATE FOR EUR/SE, AND EB/TPP/MTA/IPC 
 
 
E.O. 12958: N/A 
TAGS: ETRD ECON SENV
SUBJECT: AMBASSADOR'S MEETING WITH HEALTH MINISTER 
 
 
¶1. (Sbu) Summary:  In a meeting with Minister of Health Recep 
Akdag, the Ambassador reiterated U.S. pharmaceutical 
companies' concerns about data exclusivity and the pricing 
decree under consideration by the GOT.  The Minister pushed 
back,  claiming that there were differences of interpretation 
of Turkey's commitments under TRIPS and the EU Customs Union, 
and that the decree struck a balance between research-based 
and generic producers.  The Minister noted the relatively 
high share of Turkish public health spending that goes to 
medicines in Turkey.  The Ambassador recommended U.S. and 
Turkish trade experts exchange views in a DVC.  The 
Ambassador also noted the danger that HIV/AIDS could become 
more prevalent in Turkey.  End Summary. 
 
 
Pharmaceuticals: 
---------------- 
 
 
¶2. (Sbu) In a meeting requested by the Ambassador, he 
reiterated USG and U.S. pharmaceutical companies' concerns 
about the GOT's proposed data exclusivity policy.  Unless 
research-based companies could recoup their investment in 
research and development, the Ambassador said there was a 
danger they might stop investing.  If these companies stopped 
investing in Turkey, he went on, there could be lost jobs in 
Turkey, and there could be an effect on the local availablity 
and cost of medicines.  The Ambassador also said that the 
U.S. believes that the TRIPS agreement and Turkey's customs 
union with the EU both require Turkey to protect the 
exclusivity of data. 
 
 
¶3. (Sbu) Referring to the recent meeting between Trade 
Minister Tuzmen and USTR Zoellick, as well as to the imminent 
meeting between USDOC A/S Lash and Ambassador Logoglu, the 
Ambassador said he did not want the GOT to be surprised if 
the USG ruled that Turkey should be elevated the Priority 
Watch list under Special 301. 
 
 
¶4. (Sbu) The Minister responded by claiming that everything 
the GOT had done on this issue was done in close consultation 
with companies in the pharmaceutical sector.  Admitting that 
imported pharmaceuticals had experienced low profit margins 
over the past two years, the Minister asserted that a new 
pricing decree eliminated the differential between the profit 
margins of imported and domestic drugs.  He pointed out that 
the new pricing policy, like that of Greece, would help the 
state to save money by using the lowest price in five 
European countries as a reference.  The Minister said the 
Turkish budget allocation for medicine is lower than any EU 
country's.  In Turkey, the Minister said that majority of 
spending on medicine comes from public sector insurance, and 
that Turkey spends $150 per capita on health whereas the U.S. 
spends $4,000.  Moreover, he contrasted the share of health 
spending that goes to medicines in Turkey, at 40 percent, 
with that in developed countries: 15 percent.  He therefore 
was confident that the U.S. and European countries would 
approach the issue in an understanding way, taking into 
account Turkey's large budgetary allocation to cover the 
deficit in its Social Security system. Except for some 
companies pushing for higher prices, the Minister claimed 
that there was broad agreement with the pharmaceutical sector 
on the new pricing policy. 
 
 
¶5. (Sbu) On intellectual property rights issues, the Minister 
said Turkey will fulfill its Customs Union and TRIPS 
commitments.  Throughout the process, the Minister believed 
that the only disagreement was one of interpretation. 
Regarding TRIPS he referred to the phase-in period for 
developing countries. 
 
 
¶6. (Sbu) The Health Minister reminded the Ambassador that 
other GOT agencies play important roles on this issue: the 
State Planning Organization and the Ministry of Finance, but 
most importantly the Foreign Trade and Industry Ministries, 
with the Minister of Industry chairing the Economic committee 
of the Council of Ministers.  Coming back to the need for 
clarity in interpreting concepts in international agreements, 
the Minister likened the differences in interpretation to the 
story of the blind man describing the elephant based on the 
part he was touching.  He implied that, on the data 
exclusivity issue,  different sides were closing their eyes 
to the part of the elephant they could not reach.  He called 
for the research-based companies and the generics to find 
common ground during the transition period, and then share 
their position with the public sector which is the major 
consumer of their products. 
 
 
¶7. (Sbu) Finally, the Minister made a vague reference to the 
possibility pharmaceutical companies would try to impose 
measures by force, in which case Turkey would need to react 
with protective measures.  The Minister doubted such a 
situation would ever arise, however, because the 
pharmaceutical companies are likely to look to the attractive 
future of the Turkish pharmaceutical market, in which 
spending on medicines is likely to rise substantially in the 
years to come. 
 
 
¶8. (Sbu) The Ambassador agreed that the Turkish market would 
be attractive, but only if pharmaceutical companies could 
recoup their investment in R and D.  In a globally 
integrating world, with Turkey poised to enter the EU, the 
Ambassador said protectionist measures are self-defeating. 
The data exclusivity issue is a problem not only for American 
companies, but for European companies as well.  The 
Ambassador also said he was well aware of the 
interministerial nature of the issue for the GOT, and said he 
would continue to raise it with other ministers. 
 
 
¶9. (Sbu) In order to try to deal with the differing 
interpretations of TRIPS concerning data exclusivity, the 
Ambassador thought it would be useful to get U.S. and Turkish 
IPR experts together using a DVC to save time.  The 
Ambassador also agreed that generic and research-based 
companies needed to have more dialogue: even though there are 
sharp differences, the two groups share some long-term 
interests. 
 
 
¶10. (Sbu) Noting the important role U.S. companies play in 
the global pharmaceutical industry, the Minister acknowledged 
the importance of the Ambassador raising the issue with him, 
and undertook to pass on the Ambassador's message to his GOT 
colleagues.  The Minister reiterated his optimism that the 
issue could be solved. 
 
 
HIV/AIDS: 
----------- 
 
 
¶11. (Sbu) At the end of the meeting, the Ambassador noted 
concerns about a potential increase in prevalence in HIV/AIDS 
in the Black Sea region:  though Turkey is not the most 
at-risk country in the region, there is a danger that 
HIV/AIDS could become much more prevalent.  The Minister 
agreed that Turkey had been fortunate so far.  He said that 
there was a need to increase education for those who were not 
"monogamous."  He asserted that the GOT attached great 
importance to education and prevention and that it would 
continue its efforts. 
EDELMAN