Earlier today, the two o’clock news on the state-owned Voice of Israel carried a brief story stating that a joint committee of the Foreign Ministry, the Finance Ministry, the Justice Ministry and the Health Ministry announced that Israel will accede to the demands of several countries, principally the USA, and extend the life of “patents for producing medicines”. According the story, until now Israel has allowed local companies to produce drugs before the patents on those drugs expired in other countries (basically a true statement – see elaboration below). The Minister of Industry and Trade was reported as saying that this will pave the way for Israel to join the OECD. The story also reported that Israel has agreed to change the way drugs receive approval. (If you understand Hebrew, you can download the broadcast and start listening at the 2:44 mark Download 14 00).
The story is sketchy, and in a few minutes of searching the major new websites in Israel I haven’t yet found anything with more details, nor have I been able to reach people who may have first-hand knowledge of what was discussed and concluded. No doubt more details will emerge in the next day. However, it’s not difficult to guess the issues that will purportedly be addressed: patent term extensions (PTE) for pharmaceuticals and exclusivity for the data supplied by innovative pharma companies to the Health Ministry when requesting approval of their new drugs.
Israel’s current PTE legislation is extremely restrictive, conditioning the grant of a PTE on the grant of PTEs for corresponding patents in certain other countries (e.g. no PTE in the USA = no PTE in Israel), and similarly limiting the duration of those PTEs to the duration of the earliest-expiring PTE one of those certain countries and/or to the earliest grant of marketing approval for the patent-protected drug in one of those countries. The upshot is that, as reported correctly in the new story, patent protection in Israel often expires before it expires in other western countries, enabling local generic manufacturers to begin to manufacture and stockpile products for sale abroad before their generic counterparts in those countries can do the same. Thus Israeli generic drug companies can have product ready to sell in those countries as soon as patent and any other legal prohibitions on such sale have lapsed.
Similarly, Israel’s data protection scheme prevents generics from being approved for local sale for a period of up to five years, but the period in question may be shorter, depending on when the product was first approved elsewhere. More importantly, the statute doesn’t prohibit local generic drug companies from relying on innovators’ data for purposes of getting export licenses from the Health Ministry. This is the other part of the puzzle that enables the local generic industry to be ready to step in quickly once the sale of generics becomes permissible in another country.
These are the two points on which the U.S. has long been pressuring Israel (see, for example, the last several “Special 301” reports of the United States Trade Representative, which because of these two points have put Israel on the “Priority Watch List” alongside countries like China, Russia, Argentina, Chile, Pakistan, India, Thailand and Venezuela), so presumably these are the points that the ministries plan to address.
Among the many aspects of the new report that aren’t clear to me (aside from the obvious questions, Why is the Minister of Industry and Trade commenting on this matter if his own ministry wasn’t involved in the discussions? And why wasn’t his ministry involved in the discussions?), the most significant one is, what’s changed since the legislation was enacted that’s going to allow that legislation to be changed now? So far, in both the patent term extension and data exclusivity provisions, the local generic industry has gotten pretty much what it wants, despite heavy lobbying from the Israeli equivalent of PhRMA and at least one large innovator company. That’s no surprise: Israel’s largest private-sector employer is a generic drug company (guess who?). That’s a lot of jobs, a lot of taxes being paid, and most importantly, a lot of votes.
When the question of data exclusivity was being debated in the first half of the decade (the legislation was finally adopted in late 2005), the generic industry’s main argument was that imposing data exclusivity would simply give an advantage to competitors in countries like India that lack such legislation, and would necessitate the moving of Israel jobs overseas. A similar argument was made with respect to the patent term extension provisions when these were being adopted. I don’t see that argument changing now.
Perhaps the ministries don’t really plan to do anything, or they plan to make changes thata will effectively still give the local generic industry what it wants, which is why above I said that these are the issues that will purportedly be addressed. Or maybe this time the Knesset will call the industry’s bluff and enact stricter legislation, figuring that manufacturing of drugs for export constitutes a small portion of the local generic industry’s activities, and that not many jobs, if any will be lost. (I don’t have the figures to confirm whether or not that’s really the case).
It any event, it will be interesting to see how this plays out. I’ll blog more on this as more information becomes available.
