VZCZCXYZ0002
RR RUEHWEB

DE RUEHHE #0311/01 1910935
ZNR UUUUU ZZH
R 090935Z JUL 08
FM AMEMBASSY HELSINKI
TO RUEHC/SECSTATE WASHDC 4415
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUCNMEU/EU INTEREST COLLECTIVE
RUEHNY/AMEMBASSY OSLO 4744

UNCLAS HELSINKI 000311 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD FI PREL
SUBJECT: FINNISH GOVERNMENT APPROVES PHARMACEUTICAL 
 
REFERENCE PRICING SYSTEM 
 
¶1. Summary:  In a disappointing move and despite Embassy and 
industry efforts, the Finnish cabinet voted unanimously June 
25 to approve a reference pricing scheme for pharmaceuticals, 
a provision of which undermines the value of patent 
protection for medicines created and manufactured by U.S. and 
other pharmaceutical companies. Parliament is expected to 
approve the proposal at the end of the summer.  Despite the 
fact that the Ministry of Economy and Employment, the 
Ministry of Foreign Affairs and the Chancellor of Justice 
initially opposed the proposal and Prime Minister Vanhanen 
was equivocal, in the end all acquiesced and supported the 
Minister of Social Affairs and Health and the short-term 
attraction of an estimated 50 million euros annually in 
savings.  Embassy will engage key parliamentary figures in 
the next month to urge that the government develop a revised 
proposal that achieves their stated objective of containing 
health care costs but that will maintain the level of 
intellectual property protection that pharmaceutical 
companies have previously enjoyed in Finland and continue to 
enjoy elsewhere in the European Union.  If the proposal 
passes as written, post will consult with local U.S. industry 
and Washington to determine if a Special 301 listing is 
appropriate in the 2009 cycle.  End Summary. 
 
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Background 
---------- 
 
¶2.  Product patents have been granted in Finland only since 
¶1995.  As such, nearly all products on the Finnish market are 
still protected only by analoguous process patents.  Prior to 
2006, when Finland enacted the fix it is now proposing to 
withdraw, the level of protection for innovative medicines in 
Finland was among the lowest in the EU.  At that time, 
industry faced three major hurdles that taken together formed 
a perfect storm:  weak patent protection, liberal market 
authorization and mandatory generic substitution. 
 
--------------------------------------------- ------- 
Finland Does the Right Thing But Then Changes Course 
--------------------------------------------- ------- 
 
¶3.  After much Industry and Embassy lobbying, in 2006, the 
Finnish government established criteria in Section 57(c) of 
its Medicines Act that excluded pharmaceutical products from 
generic reimbursement if they were protected by an analogus 
process patent in Finland and enjoyed valid patent protection 
in at least five other countries in the European Union. 
57(c) was the result of long negotiations and was seen by 
industry as a fair and equitable solution.  Indeed, it was 
used as an example for other countries, notably Norway, of 
the ideal legislative remedy.  Trouble started in the summer 
of 2007 when the Finnish Pharmaceutical Pricing Board (PPB) 
began cancelling the reimbursement status of some innovative 
drugs, claiming the PPB was bound only by the Health 
Insurance Act, not the the Medicines Act that contained the 
exclusion criteria. At first, Industry and Econoff believed 
this was an isolated action by an overzealous PPB chief, 
especially because when we raised it with the newly-installed 
Health Minister, she freely admitted she did not know what we 
were talking about.  Clearly she eventually got up to speed, 
because before long her ministry was overtly supporting the 
complete withdrawal of the 57(c) arrangement instead of 
supporting similar exclusion criteria for the Health 
Insurance Act as industry was proposing. 
 
------------------------ 
USG and Industry Efforts 
------------------------ 
 
¶4. Beginning late last year, Econoff and Commercial Officer 
began working closely with the U.S. pharmaceutical company 
representatives here in Finland as well as with the local 
trade association Pharma Industry Finland (PIF) and its 
director, former Finance Minister Suvi-Anne Siimes to devise 
a strategy to head off the cancellation of 57(c).  Since 
January 2008 the Embassy has raised this at the highest level 
of Finnish government, including with the Prime Minister but 
also with virtually every other minister in the entire 
government.  Our strategy, carefully coordinated with 
industry and Washington, has focused on underscoring that 
Finland's knowledge-based economy has attracted much r&d 
investment, including health-related project funds from the 
USG.  A small IPR deficiency would undermine Finland's 
deserved reputation for innovation, a blow that was surely 
not worth the short-term gains from savings.  Industry 
reinforced this message during the visit of Alex Azar, Eli 
Lilly's Senior VP for Corporate Affairs (and a former Deputy 
Secretary of HHS) and through intensive lobbying by PIF and 
Siimes.  Siimes has also reached out to the German, French 
 
and Swiss Embassies whose companies also stand to suffer 
under the new arrangement.  USTR Ambassador Schwab and 
Secretary Gutierrez have written their Finnish counterparts 
on this issue and it has been raised with the Finnish Embassy 
in Washington and during the visits of high-level Finnish 
government officials. 
 
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Next Steps 
---------- 
 
¶5.  With the cabinet's approval of the reference pricing 
scheme and the subsequent removal of the protection 
innovative products enjoyed under Section 57(c), there are 
few steps left.  Nonetheless, Embassy has a small window 
until the end of the summer when parliament will reconvene 
and consider the proposal.  Given that the MPs' party 
representatives in the cabinet have already approved the 
proposal, however, chances for success are slim.  However, we 
remain committed to raising this with parliamentary leaders 
in an attempt to encourage the development of a revised 
proposal.  If that fails, we will examine whether this 
unfortunate set of events merits Finland's inclusion on the 
Special 301 list. 
 
BUTLER