Would Israel Sacrifice Teva?

Will the Israeli government prefer to protect the interests of Teva Pharmaceutical Industries or sacrifice these interests on the alter of the OECD?

A document from the OECD Trade Committee reached the Ministry of Industry, Trade and Labor a few days ago; it includes questions about Israel's ideas on intellectual property.

Behind these questions lies a battle for business worth billions of dollars annually; between makers of branded pharmaceuticals and Israeli generics companies, led by Teva.

The questions are a diplomatic way of wording the demands OECD countries have of Israel - they want Israel to push through legislation or regulations that would extend the terms of patents belonging to foreign makers of branded drugs.

Such an extension would mean that branded companies would enjoy the sole right to sell a product, while Teva and other generics companies would be kept out of the market for as long as possible. As a result, of course, the profits of proprietary firms would increase at the expense of generics companies.

But the Israeli government would pay a price as well: Branded drugs are far more expensive than generic ones, forcing the treasury to finance a more expensive basket of products for Israel's Health Maintenance Organizations.

"I'm not against joining the OECD, but Israeli generics must be allowed to flourish," Chaim Hurvitz, Teva senior vice president and chairman of the pharmaceutical arm of the Manufacturers Association, told TheMarker yesterday. "The basic demands of the Americans and Europeans are draconian. If we sell out cheaply now, we will find ourselves badly hurt later on."

The disagreement between the OECD and Israel is over the demand to extend patent protection on proprietary drugs by five years. Hurvitz says Israel is willing to extend it by a year, as part of a general agreement. In addition, branded companies want to decouple the date patent protection begins in Israel from the date it begins in other countries.

Israel, however, refuses to delink the two in order to pressure companies to register drugs in Israel as soon as possible; this would be in the interest of Israeli generics firms overseas.

The OECD also wants to extend the period under which proprietary drugs enjoy exclusivity in Israel. Under the law, such protection is provided for five and a half years after registration. Assuming that approval by the Health Ministry takes six months, this patent protection would wind up at five years.

Sources in Jerusalem say the proprietary companies want to take advantage of Israel's desire to join the OECD by pressuring the United States and European Union to demand what they have failed to obtain by other means in recent years.