VZCZCXYZ0000
PP RUEHWEB

DE RUEHSL #0066/01 0461334
ZNR UUUUU ZZH
P 151334Z FEB 08
FM AMEMBASSY BRATISLAVA
TO RUEHC/SECSTATE WASHDC PRIORITY 1517
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS BRATISLAVA 000066 
 
SIPDIS 
 
SIPDIS 
 
DEPT PLEASE PASS TO USTR JCHOE-GROVES 
USDOC FOR 4232/ITA/MAC/EUR/MROGERS 
USDOC FOR ITA/MAC/OIPR FOR CPETERS 
STATE FOR EEB/TPP/IPE JBOGER 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON LO
SUBJECT: 2008 SPECIAL 301 REVIEW FOR SLOVAKIA 
 
REF: A. SECSTATE 9475 
 
     ¶B. 07 BRATISLAVA 173 
 
¶1. Summary and Recommendation: Protecting pharmaceutical 
patent rights has been an ongoing battle requiring regular 
Embassy attention since Slovakia was removed from the Special 
301 Watch List in 2006.  There have been two attempts to 
water-down or eliminate the hard-won patent linkage amendment 
in the past year, both of which have failed.  The Slovak 
government (GOS) passed new reimbursement legislation in 
December 2007, which the local PhRMA association argues 
further hinders market access for their products through 
arbitrary and non-transparent procedures for setting prices 
and reimbursement rates. This new Reimbursement Act also 
allows generic companies to receive pricing and reimbursement 
approval in advance of patent expiration, which could create 
an opening for possible patent infringement due to the lack 
of a set link between the committees making these decisions 
and the Patent Office.  We do not recommend including 
Slovakia on the 2008 Special 301 Watch List, as has been 
recommended by PhRMA, but we would like to take advantage of 
the April Special 301 announcement to send a strong message 
to the GOS that we continue to have concerns about its 
commitment to protecting pharmaceutical patent rights.  The 
demarche could specifically encourage the Health Ministry to 
issue a decree clearly defining the link between pricing and 
reimbursement approval for generic products and the patent 
expiration date for the original product.  End summary and 
recommendation. 
 
PATENT LINKAGE THREATENED, BUT PROVISION REMAINS 
--------------------------------------------- --- 
 
¶2. Slovakia was removed from the Special 301 Watch List in 
2006 and was not recommended for inclusion in 2007 in 
recognition of the significant progress the country had made 
in addressing outstanding pharmaceutical patent concerns.  In 
particular, the GOS passed legislation in May, 2006 that 
created a formal link between the Drug Control Authority 
(SUKL) and the Industrial Property Office (Patent Office) to 
ensure that patent-infringing drugs would not be given market 
access.  The patent linkage legislation came under threat two 
times in the past year, and was only defeated through the 
concerted efforts of the Embassy and the American Chamber of 
Commerce's Local Area Working Group (LAWG), the local PhRMA 
association. 
 
¶3. The debate over the patent linkage amendment was first 
reopened in Spring 2007 after a Slovak Parliamentarian with 
business ties to the largest Slovak generic pharmaceutical 
manufacturer introduced an amendment to the patent linkage 
provision (Reftel B). The generic industry argued that the 
2006 amendment contravened European Commission directives in 
that it delayed generic entry to the market by not allowing 
them to begin the registration process in advance of patent 
expiration. LAWG and the Ministry of Health brokered a 
compromise amendment that allowed generic producers to take 
all of the necessary steps to register a drug in advance of 
patent expiration, while ensuring that the generic version of 
the drug did not come onto the market before the patent 
expired.  The new compromise amendment, which protected the 
concet of patent linkage, was approved by Parliament and 
signed into law on July 1, 2007. 
 
¶4. The second challenge to patent linkage came directly from 
the Ministry of Health (MOH) less than a month later, when it 
introduced an amendment that would eliminate the 
recently-approved patent linkage provision altogether. The 
provision was buried in an unrelated amendment to the law on 
health care reimbursement and was circulated for 
inter-ministerial comments at the beginning of the 
traditional summer vacation.  A strongly-worded letter from 
the Ambassador and the direct intervention by visiting 
Commerce A/S Hernandez led the Health Minister to remove this 
provision from the legislation. 
 
INNOVATIVE COMPANIES REMAIN UNDER THREAT 
-------------------- ------------------- 
 
¶5. The Reimbursement Act, without the provision to remove 
patent linkage, was passed by the Parliament in December 
¶2007.  LAWG argues that the new legislation hinders market 
access by reducing the flexibility in setting reimbursement 
prices and failing to provide a transparent process for 
companies to appeal government decisions regarding pricing 
and reimbursement.  LAWG is also concerned, based in large 
part on the repeated attempts in recent years to eliminate 
the patent linkage amendment, that the new law creates an 
opportunity for generic companies to potentially infringe 
patent rights.  Although the law still does not allow generic 
marketing authorization to become effective while the 
original product is under patent protection, the 
Reimbursement Act now allows generic companies to receive 
pricing approval and be placed on the government's 
reimbursement list before the generic's marketing 
authorization has entered into force. 
 
¶6. The new reimbursement law and the implementing regulations 
do not contain specific language to ensure that the pricing 
and reimbursement committees create a link to the date of 
patent approval.  The Ambassador raised this concern with the 
Health Minister in advance of the passage of the legislation, 
and was assured in a November 28 letter from the Minister 
that "a generic drug may not be entered on the categorization 
list before the issuance of a final decision on its 
registration, even where it has been decided on the basis of 
the categorization procedure that it meets the criteria for 
entry on the categorization list."  Although LAWG views this 
provision as an unfair trade practice since an innovative 
product can only begin the price approval and reimbursement 
process with an effective marketing authorization, the main 
complaint for the purposes of the Special 301 process is that 
it creates an opening for a possible patent infringement. 
LAWG has suggested to Econoff that the IPR component of this 
issue could be addressed through an MOH decree creating a 
clear link between the reimbursement and pricing committees 
and the Patent Office. 
 
CONTINUING DELAYS ON THE STORAGE FACILITY 
-------------------- -------------------- 
 
¶7. As a part of the 2006 Special 301 review process the MOH 
promised to procure a new secure storage facility for 
proprietary drug application data. The original plans called 
for the completion of the facility by last summer, but the 
project has been repeatedly delayed and will not be completed 
until 2009, according to the latest MOH estimates.  SUKL, 
which is responsible for the protection of the data, provided 
temporary security upgrades at the current facility in 2006 
in response to Embassy concerns.  Emboffs visited the 
facility last winter and were satisfied with the 
improvements, though the lack of space and design of the 
building make the facility unsuitable over the long-term. We 
will continue to keep the pressure on SUKL and MOH to ensure 
that they follow the current timetable and complete the 
project on time. 
 
NO WATCH LIST, BUT WE NEED TO KEEP THE GOS' ATTENTION 
-------------------------- -------------------------- 
 
¶8. The annual Special 301 review remains a useful tool for 
ensuring that the Slovak government continues to adequately 
protect intellectual property, especially pharmaceutical 
patents.  The pressure to weaken the patent legislation and 
squeeze innovative companies has been persistent and is 
unlikely to diminish given the strong and well-connected 
generic lobby and the government's stated objectives of both 
reducing the budget deficit and lowering costs in the health 
sector.  Although the new reimbursement legislation creates 
the possibility for patent infringement due to the lack of a 
clear link between the reimbursement and pricing committees 
and the Patent Office, there is no evidence that this will 
happen.  We therefore do not support including Slovakia on 
the 2008 Special 301 Watch List at this time, as has been 
recommended by PhRMA.  We would like to use this process to 
send a strong signal to the government, however, and request 
a Slovak-specific demarche to the GOS to coincide with the 
announcement of the Special 301 results in April.  The 
demarche could highlight these concerns and encourage the MOH 
to issue a decree clearly defining the link between a generic 
product's pricing and reimbursement approval and the patent 
expiration date for the original drug. 
OBSITNIK