The Bottom Line / The Drug Companies' Big Lie

Teva is worried, and justifiably so.

Trade and Industry Minister Eli Yishai is sewing up a deal with the Americans, and it will probably be at Teva's expense.

Yishai recently visited the Office of the U.S. Trade Representative (USTR) and worked on a deal: We will consider your request for changes in the law on patents and protection of information in pharmaceutical licensing. In return, the U.S. will remove Israel from the blacklist of countries that violate intellectual property rights.

Not lower Israel's status on the list, but completely remove it once and for all.

Hiding behind the USTR's request are hundreds of millions of dollars from brand-name U.S. drug companies that want to slow growth at Teva, the world's biggest maker of generic drugs.

Drug manufacturers know that the earlier Teva can put a generic rival on the market, the less money they will make.

Israeli law protects patents and data on pharmaceuticals, and the disputes are marginal, covering when the clock starts ticking on patents and when can they be extended. But it turns out that these issues are worth hundreds of millions of dollars, if not more.

To increase the pressure on Israel, which wants to develop its own pharmaceutical industry in cooperation with foreign drug firms, the U.S. drug companies' organization - Pharmaceutical Research and Manufacturers of America (PhRMA) - has been waging a campaign for years.

These brand-name firms say they have refrained from opening research and development operations in Israel as long as their demands for protection through the legal changes are not met.

This week the truth came out, and the companies were exposed in their full nakedness.

Pharmaceutical giant Merck & Co. announced that it did not know of any problems with Israel's patent and pharmaceutical laws, and that the company is happy to start operating here. Merck's chairman visited Israel to sign an agreement on such cooperation with the Chief Scientist's Office.

Merck is not alone. Baxter executives are coming next week, and even Pfizer, which has made a loud protest about Israeli patent laws, has also asked for meetings with Israeli biotech and drug startups.

Some cynics claim that the drug companies are only manipulating the government to advance their demands for changes in the patent laws.

But Merck's announcement shows that these claims are specious. The reality is that a company that does not want to miss out on the opportunities waiting in Israeli R&D, considered the most advanced in the world of medicine, must operate in Israel - whether the law is changed or not.

The USTR - and the Israeli government - should sit up and pay attention: Israel's laws are just fine, and all that is involved in the dispute is a power game on the part of U.S. drug companies who want to make even higher profits.

If the Americans want to take the side of the drug companies, that is their right. But Israel does not need to collaborate, and certainly there is no reason to be frightened by the American blacklist, which has no practical consequences.

Every once in a while it is worth examining existing laws to see if they are consistent with international law, and sometimes even to show a bit of good will toward our large strategic friend. But when it comes to changes, there is no need to volunteer to sacrifice our own interests.

As far as Israeli interests are concerned, we should remember that there is no connection between changing the law and the entry of multinational drug firms to Israel.

Merck and Baxter have proved that this connection is a fiction created by the PhRMA organization and is only meant to serve the commercial interests of Teva's competitors. Teva may be far from being a pure little lamb in this story, but then again there is no need to hurt Teva unnecessarily.