VZCZCXRO3373
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHLJ #0103/01 0521346
ZNR UUUUU ZZH
P 211346Z FEB 07
FM AMEMBASSY LJUBLJANA
TO RUEHC/SECSTATE WASHDC PRIORITY 5566
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 LJUBLJANA 000103 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/NCE (SSADLE), EB/TPP/IPE (JBOGER) 
STATE PLEASE PASS TO USTR LERRION 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR SI
SUBJECT: SLOVENIA: 2007 SPECIAL 301 REVIEW - RECOMMENDATION 
AGAINST INCLUSION ON WATCHLIST 
 
REF: STATE 07944 
 
 ¶1. (SBU) SUMMARY: As of 2006, Slovenian legislation on 
intellectual property rights is fully aligned with EU 
legislation, TRIPS and ratified international treaties, and 
in practice, U.S. pharmaceutical companies have access to the 
Slovene market. Recent efforts by the Government of Slovenia 
(GOS) to balance the health-care budget have posed some 
problems for "innovative" drug producers. But it appears that 
the long-term impact of the legislation will be to expand the 
availability of drugs, including innovative drugs, to the 
Slovene public. Post is encouraged by the Ministry of 
Health's (MOH) recent incorporation of PhRMA and Post's 
pricing concerns in a recent regulation. Post believes GOS 
cooperation will continue to increase, and that Slovenia does 
not warrant inclusion on the Special 301 Watch List. END 
SUMMARY. 
 
¶2. (U) INTELLECTUAL PROPERTY: Slovenia has in place necessary 
legal protections for intellectual property rights and 
provides adequate protection according to TRIPS standards. 
Slovenian legislation provides for different legal measures 
within the framework of civil, criminal and administrative 
law, which may be used by holders of intellectual property 
rights to defend their interests. The Industrial Property 
Act(IPA), the Act on Litigation Procedure (ALP) and the Act 
on Enforcement of Judgments in Civil Matters and Insurance 
(AEJCMI) are generally used in civil litigation and for cases 
involving infringement of industrial property rights. In 2007 
SIPO revamped its website so that both domestic and foreign 
parties can access the most current information regarding 
intellectual property issues. 
 
¶3. (U) COURT PROCEDURES: PhRMA's continued complaint about 
slow court procedures in Slovenia is well-founded but does 
not reflect the progress that Slovenia has made in the past 
few years. In December 2005, the Ministry Of Justice (MOJ) 
announced the Lukenda Project, a plan to eliminate judicial 
backlog by 2010. The plan called for the hiring of 500 
auxiliary court staff, upgrading courtroom technology and 
streamlining small claims cases. Results of the Lukenda 
project have been encouraging -- increased numbers of cases 
have been resolved, average time of proceedings has already 
been reduced significantly, and all small claims cases filed 
before December 2005 have been adjudicated. Over the next 
five years, the program will cut the average processing time 
of a case from 18 months to 6 months. Additionally, a number 
of alternative dispute resolution mechanisms have been 
introduced in order to alleviate pressure on the court 
system. The Slovenian Intellectual Property Office (SIPO) 
acknowledges deficiencies in Slovenia's legal system, but 
denies that current legislation favors domestic 
(pharmaceutical or other) industry. 
 
¶4. (U) To support the efforts of the GOS, Post has funded and 
coordinated several training programs for Slovene judges, 
prosecutors, and police, with several more to take place in 
¶2007. Post believes that providing US expertise is helping to 
create a more efficient judicial system, which could help 
improve the speed of case adjudication in the courts. 
 
¶5. (U) FREE CHOICE OF EXPERTS: If expert testimony is deemed 
necessary, the court may designate one or more experts, 
generally after consultation with both parties. The court 
generally designates a "court expert" - someone already 
deemed by the court to have qualifications necessary to 
comment authoritatively on the subject of the case - and will 
pay the expenses of this expert. It is also possible for the 
court to designate a person or institution which is not 
considered a "court expert," but an expert in the subject 
nonetheless, including a foreign person or institution. 
Additionally, experts may be proposed by the parties, but the 
costs associated with the proposed expert must be covered by 
the proposing party. 
 
¶6. (U) PIPELINE PROTECTION: Pipeline protection is not a 
TRIPS obligation. Slovenia introduced patent protection on 
January 1, 1993. Prior to this, there was no protection 
either in Slovenia or the former Socialist Republic of 
Yugoslavia of which Slovenia was a part until June 25, 1991. 
At the other end of the spectrum, Slovenia introduced the 
possibility of supplementary protection certificates in 1993. 
Since May 1, 2004, when Slovenia joined the EU, supplementary 
protection certificates have been granted in accordance with 
European regulations. Patent holders have the possibility to 
claim prolonged protection for a product after the expiration 
of patent protection. 
 
LJUBLJANA 00000103  002 OF 003 
 
 
 
¶7. (U) MARKET ACCESS BARRIERS: The GOS has been focused on 
controlling government spending in preparation for joining 
the euro zone (which it accomplished in January 2007). The 
Ministry of Health's (MOH) goal, as part of health-care 
reforms, was to control healthcare costs. In January 2007, 
the MOH adopted some changes to drug reimbursement 
procedures. Slovenia now employs a pricing and reimbursement 
system based on manufacturer prices for drugs in Germany, 
France, and Austria (previously it used Germany, France and 
Italy as its reference points), taking into account 
Slovenia's lower GDP. While PhRMA acknowledges that 
regulating pricing at the manufacturer level increases 
transparency, it is still dissatisfied with the reimbursement 
procedure. Slovenian officials question PhRMA's claim that 
the reimbursement procedures followed in Slovenia fall under 
the guidelines of the EU directives on transparency. Post 
understands that Slovenia's program, while perhaps not ideal, 
is a legitimate formula not unlike those used in other EU 
member states. 
 
¶8. (U) Slovenia's approach on drug pricing has been an effort 
to find a balance between the use of innovative and generic 
drugs. Contacts at the MOH have told Post that PhRMA's 
complaint on favoring domestic producers over foreign was not 
justified and that the pricing measures were not specifically 
aimed at foreign producers. Post understands that domestic 
Slovene generic producers also are experiencing increased 
competition with the introduction of lower priced generic 
drugs from India. 
 
¶9. (U) PRICING: PhRMA complains that Slovenia is 
inconsistently and non-transparently applying the Anatomical 
Therapeutic Chemical (ATC) and Defined Daily Dose (DDD) 
systems. Post understands that the MOH uses the ATC/DDD as 
indicators, not exclusive determinants, of price. Contacts at 
the Ministry tell Post that there is no law or legal 
procedure prohibiting physicians from prescribing any drug 
approved for use in Slovenia. However, the system will only 
reimburse up to the value of the lowest-priced drug on the 
Interchangeable Drug List (IDL). This system would not affect 
any new, innovative drugs brought to market before the patent 
protection period ran out and generics became competitive. 
 
¶10. (U)  The MOH has told Post in the past that the changes 
in regulations have all been adopted in order to control 
healthcare costs and make decision-making more transparent. 
These decisions have significantly decreased the annual 
percentage rise in the Government's expenditures on 
healthcare. Post understands that the Ministry sees this 
current period as one of adjustment. Health Minister Andrej 
Brucan, as he unveiled the new pricing regulations on January 
23, stated that his goal is to use the increased savings to 
improve health services and to spend more on innovative drugs. 
 
¶11. (SBU) COMMENT: In general, it appears that the GOS is 
meeting its obligations under TRIPS and the 24 other treaties 
on intellectual property and patents to which it is party. 
With membership in the EU, there is added pressure to conform 
to European norms, and it is Post's opinion that Slovenia is 
making progress and will continue to do so in good faith, 
even if in some areas it has yet to achieve this goal. The 
most significant problem, by far, is an overburdened court 
system, which is also the target of many calls for reform 
from all sectors of society. COM continues to make judicial 
reform a theme in his discussions with senior government 
officials and representatives of the judicial system. Post's 
success in facilitating judicial training should also help 
Slovenia in its efforts to improve the efficiency of its 
courts. In addition to the IPR complaints, PhRMA has pointed 
to the problem of market access and drug cost reimbursement 
policies in the Slovene health system. There is agreement on 
all sides that the reimbursement mechanism employed by the 
Slovene health system has disadvantaged some innovative drug 
producers in some categories in the short run. This 
development, however, should be viewed in the context of the 
overall need for the GOS to balance its budget, bring down 
inflation, and root itself in the euro zone, which it joined 
in January 2007. The measures were not undertaken with a goal 
of favoring domestic producers of generic drugs, and 
according to the GOS, Slovenia's system is similar to the 
majority of EU members' systems. 
 
¶12. (SBU) Post hopes this information will be helpful in 
stimulating a well-informed discussion of PhRMA's claims. 
Post is committed to promoting a fair, open and transparent 
market for U.S. pharmaceuticals. We are in regular contact 
 
LJUBLJANA 00000103  003 OF 003 
 
 
with the local PhRMA and are prepared to engage further with 
the GOS on all of the issues raised by PhRMA. For 2007, 
utilizing lessons learned when PhRMA and Post successfully 
engaged the GOS to ensure a fairer pricing plan, PhRMA and 
Post are working together to proactively promote fair market 
access and find the most effective ways in which PhRMA and 
Post can lobby the GOS. We look forward to engaging in 
further dialogue on this issue, and, as always, we welcome 
guidance from both USTR and the Department. END COMMENT. 
 
ROBERTSON