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### Viewing cable 08HELSINKI311, FINNISH GOVERNMENT APPROVES PHARMACEUTICAL

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08HELSINKI311 | 2008-07-09 09:35 | 2011-04-24 00:00 | UNCLASSIFIED | Embassy Helsinki

`

    VZCZCXYZ0002
    RR RUEHWEB

    DE RUEHHE #0311/01 1910935
    ZNR UUUUU ZZH
    R 090935Z JUL 08
    FM AMEMBASSY HELSINKI
    TO RUEHC/SECSTATE WASHDC 4415
    RUCPDOC/DEPT OF COMMERCE WASHDC
    INFO RUCNMEU/EU INTEREST COLLECTIVE
    RUEHNY/AMEMBASSY OSLO 4744

` `

    UNCLAS HELSINKI 000311

    SIPDIS

    E.O. 12958: N/A
    TAGS: ETRD FI PREL
    SUBJECT: FINNISH GOVERNMENT APPROVES PHARMACEUTICAL

    REFERENCE PRICING SYSTEM

    ¶1. Summary:  In a disappointing move and despite Embassy and
    industry efforts, the Finnish cabinet voted unanimously June
    25 to approve a reference pricing scheme for pharmaceuticals,
    a provision of which undermines the value of patent
    protection for medicines created and manufactured by U.S. and
    other pharmaceutical companies. Parliament is expected to
    approve the proposal at the end of the summer.  Despite the
    fact that the Ministry of Economy and Employment, the
    Ministry of Foreign Affairs and the Chancellor of Justice
    initially opposed the proposal and Prime Minister Vanhanen
    was equivocal, in the end all acquiesced and supported the
    Minister of Social Affairs and Health and the short-term
    attraction of an estimated 50 million euros annually in
    savings.  Embassy will engage key parliamentary figures in
    the next month to urge that the government develop a revised
    proposal that achieves their stated objective of containing
    health care costs but that will maintain the level of
    intellectual property protection that pharmaceutical
    companies have previously enjoyed in Finland and continue to
    enjoy elsewhere in the European Union.  If the proposal
    passes as written, post will consult with local U.S. industry
    and Washington to determine if a Special 301 listing is
    appropriate in the 2009 cycle.  End Summary.

    ----------
    Background
    ----------

    ¶2.  Product patents have been granted in Finland only since
    ¶1995.  As such, nearly all products on the Finnish market are
    still protected only by analoguous process patents.  Prior to
    2006, when Finland enacted the fix it is now proposing to
    withdraw, the level of protection for innovative medicines in
    Finland was among the lowest in the EU.  At that time,
    industry faced three major hurdles that taken together formed
    a perfect storm:  weak patent protection, liberal market
    authorization and mandatory generic substitution.

    --------------------------------------------- -------
    Finland Does the Right Thing But Then Changes Course
    --------------------------------------------- -------

    ¶3.  After much Industry and Embassy lobbying, in 2006, the
    Finnish government established criteria in Section 57(c) of
    its Medicines Act that excluded pharmaceutical products from
    generic reimbursement if they were protected by an analogus
    process patent in Finland and enjoyed valid patent protection
    in at least five other countries in the European Union.
    57(c) was the result of long negotiations and was seen by
    industry as a fair and equitable solution.  Indeed, it was
    used as an example for other countries, notably Norway, of
    the ideal legislative remedy.  Trouble started in the summer
    of 2007 when the Finnish Pharmaceutical Pricing Board (PPB)
    began cancelling the reimbursement status of some innovative
    drugs, claiming the PPB was bound only by the Health
    Insurance Act, not the the Medicines Act that contained the
    exclusion criteria. At first, Industry and Econoff believed
    this was an isolated action by an overzealous PPB chief,
    especially because when we raised it with the newly-installed
    Health Minister, she freely admitted she did not know what we
    were talking about.  Clearly she eventually got up to speed,
    because before long her ministry was overtly supporting the
    complete withdrawal of the 57(c) arrangement instead of
    supporting similar exclusion criteria for the Health
    Insurance Act as industry was proposing.

    ------------------------
    USG and Industry Efforts
    ------------------------

    ¶4. Beginning late last year, Econoff and Commercial Officer
    began working closely with the U.S. pharmaceutical company
    representatives here in Finland as well as with the local
    trade association Pharma Industry Finland (PIF) and its
    director, former Finance Minister Suvi-Anne Siimes to devise
    a strategy to head off the cancellation of 57(c).  Since
    January 2008 the Embassy has raised this at the highest level
    of Finnish government, including with the Prime Minister but
    also with virtually every other minister in the entire
    government.  Our strategy, carefully coordinated with
    industry and Washington, has focused on underscoring that
    Finland's knowledge-based economy has attracted much r&d
    investment, including health-related project funds from the
    USG.  A small IPR deficiency would undermine Finland's
    deserved reputation for innovation, a blow that was surely
    not worth the short-term gains from savings.  Industry
    reinforced this message during the visit of Alex Azar, Eli
    Lilly's Senior VP for Corporate Affairs (and a former Deputy
    Secretary of HHS) and through intensive lobbying by PIF and
    Siimes.  Siimes has also reached out to the German, French

    and Swiss Embassies whose companies also stand to suffer
    under the new arrangement.  USTR Ambassador Schwab and
    Secretary Gutierrez have written their Finnish counterparts
    on this issue and it has been raised with the Finnish Embassy
    in Washington and during the visits of high-level Finnish
    government officials.

    ----------
    Next Steps
    ----------

    ¶5.  With the cabinet's approval of the reference pricing
    scheme and the subsequent removal of the protection
    innovative products enjoyed under Section 57(c), there are
    few steps left.  Nonetheless, Embassy has a small window
    until the end of the summer when parliament will reconvene
    and consider the proposal.  Given that the MPs' party
    representatives in the cabinet have already approved the
    proposal, however, chances for success are slim.  However, we
    remain committed to raising this with parliamentary leaders
    in an attempt to encourage the development of a revised
    proposal.  If that fails, we will examine whether this
    unfortunate set of events merits Finland's inclusion on the
    Special 301 list.

    BUTLER

`