[Ip-health] US pressure on Finland pharma pricing

Sean Flynn sflynn at wcl.american.edu
Thu Jun 9 06:48:39 PDT 2011

By Mike Palemdo


A 2008 cable from the US Embassy in Helsinki
to Washington describes the efforts of the U.S. Ambassador and his staff
to prevent a change to the Finnish reference pricing scheme for
medicines.  At issue was a provision in Section 57(c) of the Medicines
Act that reimbursed process patent-protected medicines at a higher rate
than generic competitors. Section 57(c) had been established in 2006
"after much Industry and Embassy lobbying," but by the summer of 2007,
Finnish government officials were seeking its repeal.

On June 25, 2008, the Cabinet approved a reference pricing scheme that
repealed Section 57(c).  (This is what prompted the US Embassy to write
the cable to Washington).  The repeal of Section 57(c) then headed to
the Parliament, where it passed in November.

The U.S. Embassy had worked with pharmaceutical industry representatives
to keep Section 57(c) intact.  According to the leaked cable:

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.

The cable calls the repeal "disappointing" and argues that it
"undermines the value of patent protection for medicines created and
manufacturer by U.S. and other pharmaceutical companies."  It says that
the Helsinki Embassy will "consult with local U.S. industry and
Washington to determine if a Special 301 Listing is appropriate in the
2009 cycle."

In 2009, the United States Trade Representative's Special 301 Report
9%20SPECIAL%20301%20REPORT.pdf>  did include Finland, and mentioning
this particular dispute:

U.S. industry has expressed concern that the regulatory framework in
Finland regarding process patents... will deny adequate protection to
many of the top-selling U.S. pharmaceutical products currently on the
Finnish market.

Later that year, the Department of State released its annual Investment
Climate Statement
<http://www.state.gov/e/eeb/rls/othr/ics/2009/117431.htm> , which also
included a passage on the repeal of Section 57(c):

The reference pricing scheme passed by the Finnish parliament in
November 2008 ended the 57(c) arrangement. By subjecting products
protected by process patents to the reference pricing restrictions
applicable to generic products, the new law deprives pharmaceutical
process patent holders in Finland of appropriate compensation for the
value of the intellectual property they created in the original

This dispute with Finland is part of a wider effort by the U.S.
government and industry to establish new international norms for the
negotiation of pharmaceutical prices.  According to the 2011 Special 301
/2011-special-301-report> , US officials have sought to change
pharmaceutical policies in "several industrialized trading partners,
including Finland, Germany, Greece, Japan, Korea, New Zealand, Poland,
and Taiwan."  Trade agreements with Australia and Korea have included
sections that impose a framework of rules on the way drug prices are
negotiated.  The US Trade Representative is being lobbied to include
provisions in the Trans Pacific Partnership Agreement based on Chapter
Five of the Korea-US Free Trade Agreement
set_upload_file899_12703.pdf> .

Health advocates and state leaders in the U.S. are concerned that the
establishment of new global rules on drug pricing will jeopardize the
drug discounts obtained by government programs in the U.S. that serve
low income Americans.  These include Medicaid, and the "340b" program
(which mandates discounted drugs for inner city clinics, AIDS Drug
Action Programs, and other types of "covered entities").  State leaders
have reached out to the administration to voice their concerns - see for
instance, a recent letter to President Obama from VT Governor Shumlin
%20to%20President%20Obama%20-%20June%201,%202011.pdf> .



Mike Palmedo

Assistant Director

Program on Information Justice and Intellectual Property

American University Washington College of Law

4801 Massachusetts Ave., NW

Washington, DC 20016

T - 202-2274-4442 | F - 202-274-4495

mpalmedo at wcl.american.edu


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