The economic-social cabinet yesterday approved a recommendation for a pharmaceutical intellectual property protection bill. The bill will grant a five-year marketing exclusivity period for ethical drugs, rather than the ten-year information exclusivity period demanded by the US. The cabinet decided not to amend the Patents Law (1967) (amended 1998), as was originally proposed. The bill will be appended to the 2005 Budget Arrangements Law.
The cabinet approved a clause permitting amendments on a case-by-case basis. At the same time, the inter-ministerial committee on protecting ethical drug registration files in Israel will continue negotiations with the Office of the US Trade Representative through the end of this year.
Minister of Industry Trade and Labor Ehud Olmert wants to head the negotiations with US Trade Representative Robert Zoellick, which means that changes are possible before the law is passed.
The cabinet postponed a proposal to shorten the patent period granted to international ethical drug makers to the norm in key countries (US, EU, Canada, Australia, etc.).
Shortening the patent period would have enabled Israeli generic drug makers, headed by Teva Pharmaceutical Industries Ltd. (Nasdaq:TEVA; TASE:TEVA), to begin developing generic drugs in Israel when the patent of the ethical drugs in each of the other key countries expires, before it expires in Israel. This change would enable them to increase sales by tens of millions of dollars at the expense of ethical drug companies.
Manufacturers Association of Israel Chemical & Pharmaceutical society chairman and Teva VP Israeli pharmaceutical sales Chaim Hurvitz said in response, "Severing the section regarding the shorter patents for the ethical drug companies from the overall amendment to the law gives the US an opening to pressure not to make this change.
"The rest of the change, in exclusivity, sweetens the bitter pill of the changes demanded by the US. The price of being nice to the US will cost Israel dearly in costs and the health system." This is because of the higher prices for ethical drugs caused by the delay of the entry of generic equivalents into the market, which are several times cheaper than ethical drugs.
Pharma Israel - The Association of the Research-Based Pharmaceutical Companies secretary general Tomer Feffer said, "The decision will harm investment by foreign companies in Israel, because even if it improves the current situation, it does not provide adequate intellectual property protection as expected of Israel. The decision is a serious breach of Israel's promise to the US." Pharma Israel represents the Israeli subsidiaries of international drug companies.
Exclusivity will be granted in cases where an ethical drug of an international pharmaceutical company has no registered patent in Israel, or when the patent has expired, due to prolonged clinical trials (especially for cancer treatments).
The US demanded that Israel provide information exclusivity for drug registration files of ethical drugs sent by international pharmaceutical companies to the Ministry of Health for the purpose of registering and marketing the drugs in Israel.
Israel is now waiting for the US response, which is liable to have repercussions on bilateral economic relations. Israeli sources believe that the US will try to lobby for changes in the bill favoring US drug companies before the 2005 Budget Arrangements Law (to which the bill is appended) is passed.
Published by Globes [online] - www.globes.co.il - on September 14, 2004