Drug IP talks could break down - Health Ministry source

"We are close to a bust-up, if the US adopts the pharma companies' stance."

"While it looks as though we are close to a compromise with the US, it is just as likely that we are on the verge of a bust-up," a senior Ministry of Health source told "Globes", referring to the expected agreement on information exclusivity for drugs.

As reported in "Globes" this week, Israel will be prepared to concede on two further matters to the US, in order to pass the drug information exclusivity provisions in the Economic Arrangements Bill with US agreement to the their wording. Israel will agree to be flexible on the issue of expiry of exclusivity in Israel when a competing generic drug goes on sale in any other country, by providing for a further year of protection (beyond the five years agreed), in the event that new indications are found for existing drugs (such as have been found for Botox and Viagra, for example).

According to the source, "The situation could easily degenerate into a breakdown of negotiations, if the US repeats what happened in October last year, when it came to certain understandings with Israel, but when the Israeli delegation led by Minister of Industry, Trade and Labor Ehud Olmert came to Washington, they changed their stance because of pressure from the US pharma companies."

The source went on to say that Israel's readiness to be flexible had not been communicated to the Americans in writing, because "we are waiting to see, first of all, the US official counter proposal, so as not to prevent a repeat of what happened in the past, when we understood one thing and they understood another. Only when we see their proposal will we agree to meet them halfway, and then only if their proposals are fair and they do not adopt the stance of the US pharma companies, which would be an extreme opening position."

Nevertheless, the source gave as his assessment that the talks would result in agreement by the time the budget was passed, which is expected to be in March. "I believe that we will conclude the matter, because everyone has an interest in doing so," he said. "We have cleared the air of all kinds of surrounding tensions, and we are on the verge of decisions. It may be that, in the end, Israel will not agree to the US positions, but the time for decision has arrived."

According to Ministry of Health figures, 5,000 people are currently employed in the Israel generic drugs industry, and another 25,000 are employed indirectly, while the overseas pharmaceuticals companies employ about 1,00 people, most of them in marketing and a small number in clinical trials. According to the ministry's figures, despite the absence of protection, the number of clinical trials carried out in Israel grew from 610 in 2003, to 750 in 2004.

The source said, "One must bear in mind that, so far, none of the foreign companies has set up a plant in Israel. By contrast, many of them have set up factories in India, which does not give even a single day's protection for intellectual property. The consideration of the ethical pharmaceuticals companies is the maximization of profits for their shareholders, and they apply that consideration the best way they can."

Tomer Feffer, chairperson of Pharma Israel - The Association of the Research-Based Pharmaceutical Companies, said in response, "One cannot ignore the data of the past five years, which indicate a declining trend in clinical trials in Israel. This is particularly noteworthy when one compares it with the rise in countries like Jordan, which has applied information exclusivity, and India, where, although there is still no information exclusivity, a new patents law was passed at the beginning of the year."

According to Pharma Israel's data, some 2,000 people are employed by ethical drugs companies in Israel (including the employees of Israeli ethical drugs companies such as Kamada, Biotechnology General, and Pharmos (Nasdaq: PARS)).

Published by Globes [online], Israel business news - www.globes.co.il - on February 1, 2005

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