Health Min. official: Israel should not be on intellectual property blacklist

30 April 2008

By Ronny Linder-Ganz and Yoram Gabison

Israel has been kept on the priority watch list of countries accused of intellectual property rights (IPR) violations because the Industry and Trade Ministry hid key information from the health and justice ministries, according to an unprecedented accusation leveled by Yoel Lifschitz, the deputy director general of the Health Ministry.

"The conduct of the Industry and Trade Ministry is hard to understand," Lifschitz told TheMarker.

Last week the Office of the U.S. Trade Representative (USTR) published its decision to keep Israel on the list of IPR violators, a decision that caused a storm not only among local generic pharmaceutical companies, but also within the health and justice ministries, which felt that the decision is unjustified, and caused by the problematic conduct of the Industry and Trade Ministry.

In 2005, the USTR claimed that Israel lacked sufficient protective measures on intellectual property rights for innovative pharmaceuticals.

The ministries of health and industry and trade, headed by Ehud Olmert at the time, cooperated with the USTR and innovative pharmaceutical companies: Israel's patents law was amended to accepted international standards, specifying that generic pharmaceuticals ("imitation" drugs whose biological action is identical to that of innovative pharmaceuticals) will not be licensed less than five years after the registration of the innovative pharmaceuticals.

At the time, it was believed that after the health and industry ministries had defined protective measures for intellectual property, the issue of violations was no longer on the agenda. Hence the surprise when Israel was kept on the watch list.

Lifschitz, who is responsible for coordinating intellectual property rights in the Health Ministry, said Israel's continued presence on the watch list is because the Industry and Trade Ministry has hidden the fact from the health and justice ministries that the USTR recently requested clarifications over allegations made by innovative pharmaceutical companies.

According to the allegations, export licenses granted by the Health Ministry to generic pharmaceutical companies had been issued based on product portfolios and intellectual property belonging to innovative pharmaceutical companies - and thus constituted a violation of intellectual property rights.

Lifschitz said that the health and justice ministries have now clarified to the USTR that these so-called export licenses are no more than consignment notes that indicate that the pharmaceuticals have been manufactured in accordance with good manufacturing practice, and that there is no basis for the claim of reliance on product portfolios, since the FDA does not rely on them in any case.

Innovative pharmaceutical companies in the US, he said, enjoy territorial protection of their intellectual property - no use can be made of the product portfolio for the purpose of the licensing of generic pharmaceuticals for five years after FDA licensing.

As a result, export of generic pharmaceuticals to the US is impossible, even if the expiration of the property protection period is shorter in the country of origin than that in the US.

Lifschitz suspects that Industry and Trade Minister Eli Yishai intends to bow to USTR pressure, which is strongly influenced by the powerful lobby of innovative pharmaceutical companies, and demand that the term of protection offered to intellectual property be extended beyond the five-year period set down in the 2005 law.