VZCZCXYZ0001
RR RUEHWEB

DE RUEHLJ #0081/01 0521324
ZNR UUUUU ZZH
R 211324Z FEB 08
FM AMEMBASSY LJUBLJANA
TO RUEHC/SECSTATE WASHDC 6466
INFO RUCPDOC/USDOC WASHDC
RUEHVI/AMEMBASSY VIENNA 1851

UNCLAS LJUBLJANA 000081 
 
SIPDIS 
 
DEPT FOR EUR/NCE TYEAGER, EB/TPP/IPE JBOGER 
STATE PLEASE PASS TO USTR JENNIFER CHOE GROVES, 
USDOC/ITA/MAC/OIPR CASSIE PETERS, FCS VIENNA FOR CQUINLIVAN 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR SI
SUBJECT: SLOVENIA - 2008 SPECIAL 301 REVIEW - 
RECOMMENDATION AGAINST INCLUSION ON WATCHLIST 
 
REF: STATE 09475 
 
SUMMARY 
------- 
 
 ¶1.  (SBU) Slovenian legislation on intellectual property rights 
(IPR) and data protection is fully aligned with EU legislation, 
TRIPS, WIPO, and other ratified international treaties.  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, curb inflation, and reduce 
government spending have posed some problems for "innovative" drug 
producers.  But the GOS has been responsive to commercial concerns 
and it appears that the long-term impact of the health legislation 
will be to expand the availability of drugs, including innovative 
drugs, to the Slovene public.  The Ministry of Health's (MOH) 
incorporation of the Pharmaceutical Research and Manufacturers of 
America (PhRMA) and Post's pricing concerns in the pricing 
regulation implemented in 2007 and the omission of the therapeutic 
reference pricing (TRP) from the Medicine Act submitted by the MOH 
in February 2008 are both positive signs.  The MOH intends to 
implement the EU Transparency Directive, but has cited limited 
resources as the main reason for the delay.  As well as working with 
PhRMA to address its concerns, over the last few years, Post has 
been cooperating with the GOS to provide training for judges, 
prosecutors, and staff at the Slovenian Intellectual Property Office 
(SIPO) to help address the challenges of the overburdened courts and 
strengthen U.S.-EU cooperation of IPR protection.  Post believes GOS 
cooperation will continue to increase, and recommends that Slovenia 
not be included on the Special 301 Watch List.  END SUMMARY. 
 
PHRMA CONCERNS 
-------------- 
 
¶2.  (U) ENFORCEMENT/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. 
The Ministry of Justice's Lukenda Project, started in 2005 to 
eliminate the judicial backlog, has made inroads into the backlog by 
increasing the auxiliary court staff by 500, upgrading courtroom 
technology, and streamlining small claims cases.  Slovenia has been 
steadily decreasing its court backlog every year.  Since 2005, the 
backlog has decreased by more than 18 percent.  While the GOS might 
be late in meeting its targets of eliminating judicial backlog by 
2010, cutting the average processing time of a case from 18 months 
to 6 months, and implementing alternative dispute resolution 
mechanisms, it has made progress.  SIPO acknowledges deficiencies in 
Slovenia's legal system, but denies that current legislation favors 
domestic (pharmaceutical or other) industry.  In a meeting with 
emboff in May 2007, local PhRMA members concurred with SIPO's 
statement. 
 
¶3.  (U) To help support the efforts of the GOS, Post funded and 
coordinated several training programs for Slovene judges, 
prosecutors, and police in 2007.  In 2008, Post plans to work 
cooperatively with the Slovenian Ministry of Justice and the State 
Prosecutor's Office to train judges, investigators, and prosecutors. 
 Post believes that providing U.S. expertise will help to create a 
more efficient judicial system, improving the speed of case 
adjudication in the courts. 
 
¶4. (U) FREE CHOICE OF EXPERTS:  Although PhRMA asserts that experts 
are chosen to favor local companies, courts generally choose experts 
after consultation with both parties.  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.  If one of the parties proposes an 
expert, the proposing party must cover the costs associated with the 
proposed expert. 
 
¶5.  (U) PIPELINE PROTECTION:  While pipeline protection is not part 
of the GATT/TRIPS provisions, Slovenia is working towards 
harmonizing its procedures with the EU Patent Protection Law. 
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.   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. 
 
¶6.  (U) MARKET ACCESS BARRIERS:  The GOS has been focused on 
controlling government spending, lowering inflation, and negotiating 
labor agreements.  The MOH's goal, as part of healthcare 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.  Post 
understands that Slovenia's program, while perhaps not ideal, is a 
legitimate formula not unlike those used in other EU member states. 
 
¶7.  (U) PRICING:  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 
that the government favors 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. 
 
¶8.  (U) 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. 
 
¶9.  (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.  Former 
Health Minister Andrej Brucan, as he unveiled the new pricing 
regulations in January 2007, stated that the MOH plans to use the 
increased savings to improve health services and to spend more on 
innovative drugs. 
 
INTELLECTUAL PROPERTY 
--------------------- 
 
¶10.  (U) Slovenia has enacted highly advanced and comprehensive 
legislation for the protection of intellectual property that fully 
reflects the most recent intellectual developments in the TRIPS 
Agreement (Trade Related Aspects of Intellectual Property) and 
various EU directives.  Slovenia is a full member of the TRIPS 
Council of the World Trade Organization (WTO) and the World 
Intellectual Property Organization (WIPO).  Slovenia has ratified 
the WIPO Copyright Treaty (WCT), the WIPO Performances and 
Phonograms Treaty (WPPT), and the Cyber Crime Convention. 
 
¶11.  (U) Slovenia's Intellectual Protection Office actively 
participates in the Intellectual Property Working Party of the 
Council of the EU, the Trademark Committee and other EU working 
bodies in formulation of new EU legislation.  The Copyright and 
Related Rights Act amended in 2001 and 2004 deals with all fields of 
modern copyright and related rights law, including traditional works 
and their authors, computer programs, audiovisual works, as well as 
rental and lending rights.  The act also takes into account new 
technologies such as storage and electronic memory, original 
databases, satellite broadcasting, and cable re-transmission.  The 
2004 harmonization with the EU legislation introduced a new system 
of collective management of intellectual rights following the EU's 
latest directive. 
 
¶12.  (U) 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. 
 
DATA PROTECTION 
--------------- 
 
¶13.  (U) Slovenia has a comprehensive legal framework for the 
protection of intellectual property rights.  Slovenia signed the WTO 
Uruguay Round Agreement on Trade-Related Aspects of Intellectual 
Property Rights (TRIPs) and has implemented those commitments.  The 
number of intellectual property complaints has been quite low, 
although U.S. industry representatives have raised some concerns 
about the pace and scope of action taken by the government against 
infringement. 
 
¶14.  (U) The 1994 Law on Courts gives the District Court of 
Ljubljana exclusive subject matter jurisdiction over intellectual 
property disputes.  The aim of the law is to ensure specialization 
of the judges and the speed of relevant proceedings.  Concerning the 
TRIPS Agreement's enforcement provision, Slovene law provides for a 
number of civil legal sanctions, including injunctive relief and the 
removal of the infringement, the seizure and destruction of illegal 
copies and devices, the publication of the judgment in the media, 
compensatory and punitive damages, border (customs) measures, and 
the securing of evidence and other provisional measures without the 
prior notification and hearing of the other party.  Furthermore, 
these infringements also constitute a misdemeanor with fines ranging 
from EUR 417 (USD 613) to EUR 41,729 (USD 61,000) for legal persons 
and a range of fines, from EUR 41.73 (USD 61) to EUR 2,086 (USD 
3,066), for supervisors of individual offenders provided that the 
reported offenses are not criminal in nature.  (Note.  All USD 
amounts have been calculated at 0.680 Euro to the Dollar.  End Note) 
 In such a case, the Slovenian Criminal Code would apply, which may 
result in fines or, in extreme cases, imprisonment. 
 
COUNTERFEITING/PIRACY 
--------------------- 
 
¶15.  (U) The GOS does not have significant issues regarding piracy 
of optical media (music CDs, video CDs, CD-ROMs, and DVDs); 
unauthorized procurement/use of computer software; counterfeit and 
pirated goods.  Since the enactment of the Law on Copyright and 
Related Rights Act, there have been relatively few reported 
prosecutions for infringement violations.  Most notable are cases of 
computer software piracy.  In 2002, the Koper District Prosecution 
Office successfully completed a case against a small computer 
company, which had illegally installed software on its customers' 
hard disk drives in 1997.  In January 2004, a long-running software 
piracy court case ended with a jail sentence and monetary fine. 
Since piracy prosecution is still in the early stages of 
implementation, Slovenia has dedicated resources to the training of 
prosecutors and public authorities.  Prosecutors did not file any 
new cases in 2007.  Slovenia continues to address the preservation 
of evidence in infringement procedures and border measures by 
amending existing legislation.  Moreover, in 1997, the Ministry of 
Culture established the Intellectual Property Fund, the Slovene 
Copyright Agency, and the Anti-Piracy Association of Software 
Dealers (BSA) to combat the problem of piracy in a collective 
manner. 
 
¶16.  (U) The GOS takes its situation on the border of the EU's 
Schengen zone very seriously.  Since joining the Schengen zone 
December 21, 2007, the GOS has strengthened its border security. 
The customs officials who once patrolled the Italian, Austrian, and 
Hungarian borders were reassigned to the Croatian borders.  In 2007, 
the Slovenian police did not report counterfeit or pirated goods 
crossing any of Slovenia's borders. 
 
COMMENT 
------- 
 
¶17.  (U) Post recommends against including Slovenia in the Special 
301 Watch List.  In general, 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, Post judges that 
Slovenia is making progress and will continue to do so in good 
faith, even if in some areas it has yet to achieve its goals.  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.  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.  Post believes that the GOS did not undertake these 
measures with a goal of favoring domestic producers of generic drugs 
- according to the GOS, Slovenia's system is similar to the majority 
of EU members' systems. 
 
¶18.  (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.  Post is in regular contact with the local 
PhRMA and has engaged successfully with the MOH on pricing issues 
and plans to continue to engage the GOS.  In 2008, utilizing lessons 
learned when PhRMA and Post successfully engaged the GOS to ensure a 
fairer pricing plan, PhRMA and Post worked together to proactively 
to persuade the government not to submit the therapeutic drug 
pricing (TRP) legislation to the Slovene Parliament.  Post plans to 
continue to 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. 
 
SHELTON