VZCZCXRO5383
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHWR #0259/01 0691615
ZNR UUUUU ZZH
P 101615Z MAR 09
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC PRIORITY 7942
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHKW/AMCONSUL KRAKOW 2258
RUEHBS/USEU BRUSSELS
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 03 WARSAW 000259 
 
SENSITIVE 
SIPDIS 
 
STATE PASS TO USTR 
USTR FOR DWEINER AND JCHOE GROVES 
STATE FOR EUR/CE AND EEB/TPP/IBE TMCGOWAN, JURBAN 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KIPR PL
SUBJECT: SPECIAL 301 REVIEW: SUPPLEMENTAL INFORMATION FOR 
POLAND 
 
REF: A. WARSAW 225 
     ¶B. 08 WARSAW 237 
 
WARSAW 00000259  001.2 OF 003 
 
 
¶1.  (SBU)  Summary: Removing Poland from the Special 301 
Watch List now would acknowledge progress on traditional 
intellectual property rights (IPR) issues, and -- if the USG 
decides in the future to use the Special 301 process to draw 
attention to market access issues like those troubling the 
innovative pharmaceuticals industry -- re-listing Poland in 
the future would focus attention on those problems in a way 
that simply keeping Poland on the List will not.  Poland was 
moved from the Priority Watch List to the Watch List in 2004. 
The sting of being on the Watch List has faded, and 
announcements that Poland is still on the list pass by with 
little public notice.  However, keeping Poland on the List 
despite advancements like closing the Warsaw Stadium does 
contribute to fatigue and cynicism regarding the Special 301 
process among Polish officials responsible for IPR.  The 
pharmaceuticals industry has some legitimate market access 
grievances, but not all complaints are equal.  In reviewing 
the industry's Special 301 submission, the USG's focus ought 
to be on current problems, with real commercial significance, 
and which do not simply reflect normal cost containment 
measures common in European health care systems.  End summary. 
 
------------------------- 
Poland and the Watch List 
------------------------- 
 
¶2.  (SBU)  Information is not available at post regarding 
when Poland was first added to the Watch List.  It was on the 
Watch List in 2002, and was moved to the Priority Watch List 
in 2003.  The Special 301 report that year stated, "the main 
concern substantively with Poland is the lack of political 
will by the Polish government to shut down the open air 
market inside the Government-owned Warsaw Stadium, which is 
awash in pirated optical media products and counterfeit 
goods."  In 2004, after an out-of-cycle review, Poland was 
moved back to the Watch List, because Poland initiated raids 
at the Warsaw Stadium, strengthened its copyright law, passed 
legislation regulating optical disc production and acceded to 
the WIPO Internet Treaties.  Poland has been on the Watch 
List every year since 2004. 
 
¶3.  (SBU)  The 2008 report briefly acknowledged closure of 
the Warsaw Stadium.  This milestone has not been otherwise 
recognized or rewarded in the Special 301 process. 
 
---------------------------------------- 
Resetting the Watch List's Effectiveness 
---------------------------------------- 
 
¶4.  (SBU)  The effectiveness of the Watch List as a tool to 
enhance IPR protection in Poland has waned with time.  Last 
year's announcement that Poland would be maintained on the 
Watch List received almost no media attention, while Polish 
officials charged with protecting IPR greeted the 
announcement with frustration and cynicism, questioning 
whether there were any circumstances that would lead the USG 
to take Poland off the list. 
 
¶5.  (SBU)  We understand Washington officials are considering 
whether to increase the weight in the Special 301 process 
placed on market access issues, such as those that confront 
the innovative pharmaceuticals industry in Poland.  Simply 
maintaining Poland on the Watch List year after year, even if 
the USG states it is now because of market access issues, 
will generate little or no public discussion in Poland and be 
seen by Polish officials handling IPR as the USG moving the 
goal posts.  In contrast, taking Poland off the Watch List 
now would receive public attention and recognize progress on 
traditional IPR issues.  If market access issues caused 
Poland to be restored to the Watch List next year, that too 
would be news that would receive media coverage.  Also, it 
would focus political attention on the problems in the Health 
Ministry in a way that simply keeping Poland on the Watch 
List will not. 
 
--------------------------------------------- ---- 
PhRMA's Special 301 Submission: Some Observations 
--------------------------------------------- ---- 
 
¶6.  (SBU)  As part of this year's Special 301 process, PhRMA 
plans to host a briefing for the interagency on March 11.  As 
 
WARSAW 00000259  002.2 OF 003 
 
 
noted in post's Special 301 recommendation, the innovative 
pharmaceuticals industry in Poland has some legitimate market 
access grievances (ref A).  Many of these are addressed in 
PhRMA's Special 301 submission.  However, not all complaints 
are equally valid. 
 
¶7.  (SBU)  Discovery Rights in Patent Enforcement Litigation: 
 PhRMA's submission states, "The Industrial Property Law does 
not contain discovery rules (provided in Copyright Law for 
instance), which would facilitate establishment of patent 
infringement."  An official from the Polish Patent Office 
told EconOff, "that claim is not true."  In 2007, an 
amendment to the Industrial Property Law added discovery 
provisions to Article 286 bis, in accordance with the 
requirements of the EU's Enforcement Directive (2004/48/EC of 
April 29, 2004).  Article 286 bis allows a rights holder to 
request a court order compelling the allegedly infringing 
party to provide information on the origin and distribution 
networks of the allegedly infringing goods or services.  The 
court can also order discovery of information in the hands of 
third parties.  An English language translation of the 
Industrial Property Law, including Article 286 bis, is 
available on the website of the Polish Patent Office. 
 
¶8.  (SBU)  Damages for Lost Profits:  PhRMA's submission 
states, "The current damages awarded for intellectual 
property rights violations are inadequate compensation for 
infringements, as the right holder is rarely permitted to 
recover its profits.  This clearly fails to comply with TRIPS 
Article 45."  EconOff consulted a Polish attorney with 
extensive experience representing rights holders in 
IPR-related litigation.  He disagreed with PhRMA's claim, 
stating Polish laws and regulations are quite good in 
allowing full recovery of damages.  The Copyright Law allows 
double or treble damages, while the Industrial Property Law 
allows a party to claim damages equivalent to the profits 
that would have been received under a licensing agreement for 
use of the patent.  He stated that Polish judges rule in 
accordance with the law, provided damages have been proved. 
Polish criminal law also allows for a judge to require 
partial or total restitution. 
 
¶9.  (SBU)  The Ghost List: PhRMA's submission notes that on 
the eve of EU accession, in 2004, the Polish government 
granted conditional market approval to the so-called "ghost 
list" of generic products with incomplete dossiers, and then 
states, "PhRMA member companies are concerned that MoH may 
use a similar approach in 2008 (sic) to issue conditional 
re-registrations for older generics when the transitional 
period allowed for upgrading of old dossiers comes to an 
end."  Post noted last year that we saw no foundation for 
this concern.  (Ref B)  Since then, the transitional period 
has ended.  As PhRMA notes elsewhere, producers of some older 
generics chose not to bring the dossiers for their products 
up to the EU standards, leading the Ministry of Health to 
de-list 79 drugs from the reimbursement list in July 2008. 
We do not see any basis for claiming that the Ministry acted 
in this matter in a way harmful to the interests of 
innovative pharmaceuticals producers.  The EU infringement 
proceeding regarding the original "ghost list," from 2004, is 
still pending. 
 
¶9.  (SBU)  The 13 Percent Price Cut:  In 2006, the Polish 
government instituted a 13 percent across-the-board price cut 
on imported pharmaceutical products.  In response to 
allegations that the price cut violated national treatment 
obligations, in November 2007 the government reduced the 
price it pays domestic producers for drugs manufactured using 
imported inputs.  An EU infringement proceeding regarding the 
price reduction is still pending.  However, in commercial 
terms, industry contacts state this is ancient history.  The 
price cuts have long since been absorbed, associated losses 
written off, and all of the major U.S. pharmaceuticals 
companies continue to operate in Poland. 
 
¶10.  (SBU)  Anti-Corruption Measures:  The PhRMA submission 
states, "Anyone wishing to meet a MoH representative must do 
so by formal request, with an attached, binding agenda.  At 
the meeting, at least three MoH representatives must be 
present, and the meeting will be either recorded or 
documented with minutes."  The submission then correctly 
notes that this policy has made it more difficult to meet 
with Ministry officials, but fails to mention that these 
measures are designed to end long-standing allegations of 
 
WARSAW 00000259  003.2 OF 003 
 
 
corruption in the drug approval process.  Innovative 
pharmaceutical companies have long alleged that Polish 
generics producers had a corrupt grip on Ministry officials. 
While the new anti-corruption measures -- which apply to both 
foreign and Polish producers -- have made it more difficult 
to maintain contact with Ministry officials, there is 
significantly more transparency regarding those contacts that 
do occur. 
 
¶11.  (SBU)  Restrictions on Sales Calls:  At the end of 2008, 
the Health Ministry adopted a regulation prohibiting sales 
calls on doctors and hospitals during working hours.  The 
regulation was based on a similar measure in effect in 
Sweden, and post understands that other European countries 
with government-financed health care systems, such as the 
United Kingdom, also regulate the frequency of 
pharmaceuticals sales calls on physicians. 
 
¶12.  (SBU)  Fixed Prices and Margins:  The PhRMA submission 
states, "An example of a discriminatory government pricing 
activity which affects U.S. and other foreign pharmaceutical 
companies is the planned amendment to the Pricing Act of the 
Pharmaceutical Law, which would formally define selling price 
and fixed margins."  The bill has not yet been introduced 
into the Polish parliament.  More importantly, as one 
pharmaceuticals company general manager told EconOff, fixed 
prices and margins are part of the medical system in 20 other 
EU Member States. 
 
¶13.  (SBU)  Poland is not unique in presenting market access 
issues for the pharmaceuticals industry.  In the general 
introduction to its Special 301 submission, PhRMA states, 
"The government entities responsible for pricing and 
reimbursement in most countries tend to be highly opaque 
bureaucracies, and the process of obtaining a 
government-approved price can be lengthy."  The situation in 
Poland should be assessed in light of the general European 
background.  While Polish spending on health care has been 
increasing (Poland now spends PLN 11 billion per year (about 
USD 3 billion) on pharmaceuticals), the cost of 
pharmaceuticals also continues to increase.  The Polish 
government has to make tough policy choices regarding which 
drugs to fund, and at what level.  While pharmaceuticals 
companies often assert that they would be happy with a 
transparent process, even if it led to decisions not to fund 
their drugs, in practice they seem to resent all government 
measures aimed at cost containment, as these also inevitably 
limit drug companies' sales. 
ASHE