International drug companies believe that the US is liable to put Israel in a more severe category of countries that fail to protect intellectual property rights, and threaten sanctions. Yesterday, the Knesset approved an amendment to the Patents Law (1967) (amended 1998).
The amendment stipulates that generic drug companies, which mainly means Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), can begin developing generic drugs while the patent for the corresponding ethical drug is still in force. Patents for ethical drugs will be extended only according to the shortest period among the countries listed in the new amendment.
The European Union (EU) is also liable to consider harsh measures against Israel, following approval of the amendment. A senior pharmaceutical industry source said, “Israel is sending a clear message that investment in the country is not safe, and probably illogical, too.”
US Trade Representative Rob Portman told Minister of Industry, Trade, and Labor Ehud Olmert last week that the US objected to the change in the Patents Law, and demanded that the government withdraw it. Olmert refused, and demanded that the US remove Israel from its priority watch list of countries violating intellectual property rights. In addition to Israel, this list includes countries like India, China, Brazil, and Egypt. The risk now is that the US will downgrade Israel to its priority foreign countries list, which currently includes only Ukraine. Countries on this list are subject to economic sanctions by the US.
Sources at European drug companies say that if the EU believes that European countries are having trouble trading with their trade partners because of regulation and legislation that create trade barriers, it opens an investigation against the relevant countries.
Published by Globes [online] - www.globes.co.il - on December 22, 2005