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Israel Ignores US Intellectual Property Concerns

June 27, 2005

Israel is likely to ignore US opposition to two key new intellectual property measures: the data exclusivity bill approved in March and a draft amendment to the country's Patent Law. US sources believe that latter measure, which is still awaiting its final form despite legislative approval in December 2004, is set to upset the "balance of interests" between Israel's generics sector and US-based drug multinationals.

The US now claims that new data exclusivity measures fall far short of "OECD level" data protection -- a significant comment in view of recent warnings by European Union negotiators that the legislation could prejudice Israel's membership of the OECD. The data exclusivity bill's terms admit five-year data exclusivity, with no extension, although Israel's freedom of information laws, in practice, allow generic drugmakers to get around this provision.

Further, the US believes that the new patent law's clause that patent expiry in Israel may be triggered by expiry in a "major" foreign market is another bone of contention. Additionally, the promised five-year patent extensions are likely only to amount to two-and-a-half years, given regulatory delays and tough new re-registration criteria. Because of this shorter exclusivity period and the continued ability of drugmakers to develop generic formulations before patent expiry, Israel is likely to preserve the advantages it has traditionally offered its domestic pharmaceuticals sector.

Many observers see the work of Israeli generics makers in this, notably Teva. The company has previously threatened to relocate much of its operations if the government were to pass new, unfavourable intellectual property laws. With generics accounting for 50% of all prescriptions written in Israel, and the industry accounting for a significant slice of the country's exports, the resistance to US pressure by Israeli officials is unsurprising. Nevertheless, many research-based foreign drugmakers will hope that the legislation's true limitations will be proven in the courts.