[Ip-health] 1999 US Government cable pressuring Thailand on ddI compulsory licensing

[Joy Spencer]

Note:  This is a 1999 US government cable pressuring Thailand on ddI
compulsory licensing.
The author is Richard E. Hecklinger, former US ambassador to Thailand,
writing to the Secretary of State and others.  He was replaced by Darryl
N. Johnson on December 7, 2001 and is currently Deputy
Secretary-Generals of the Organisation for Economic Co-operation and
Development (OECD).

				UNCLASSIFIED
			   DEPARTMENT OF COMMERCE

Nov 99
FM Amembassy Bangkok
TO Ruehc/secstate washdc priority 0958
SUBJECT: Compulsory Licensing of HIV/AIDS drugs

1. This is an action cable. Please see para 8.

2.  Aids activists are apparently pressing the RTG to invoke compulsory
licensing (CL) on one or more HIV drugs.  Post has been informed by U.S.
Pharmaceutical industry representatives that NGOs are pushing the
Director General of the RTG's Eepartment of Intellectual Property (DIP)
to use clauses of the patent act to issue the CLs.  Thai Aids Activist
groups have enlisted the director of the RTG's official pharmaceutical
organization (The GPO, a state enterprise) to approach the DIP and begin
the CL process.  There has been a lot of publicity about the expense and
availability of HIV/AIDS drugs in Thailand over the past several weeks,
and reportedly the activist groups would like it to be an issue at the
Seattle Ministerial as well, if that can be managed.  We have also been
told that the Thai Embassy in Washington held a meeting on this topic
with Pharmaceutical Industry representatives on November 18.  However,
no one in Bangkok yet has a read-out on what happened there.

3.  Post has spoken with the DIP, and it is rather clear that they do
not want to use the CL clause.  They have their hands full with the
fall-out from stepped-up optical media enforcement efforts just now, and
are just beginning to earn plaudits for a better enforcement job.  They
certainly don't want to be the cause of a trade dispute just before the
Seattle Meeting, which is what we have always told them would happen if
the compulsary licensing clause should be invoked.

4.  The CL process has two steps.  A mandatory sit-down negotiation
between the parties is required, refereed if necessary by the DIP, only
then can the authority of the DG to judge a reasonable price for a drug
be used.  The DIP says the first step was taken during the past week and
that a reasonable compromise was reached between the parties.  The DIP
also believes that if CL must be used, an appropriate fee would be paid
to the patent holders, thereby obviating the need for much further
discussion.

5.  The industry representative (Meyers-Squibb) maintains that no real
negotiation took place, such a negotiation would take a good deal longer
than a week, in which only one meeting was held.  In his view they
simply had a healthy and cordial talk with the head of the Thai GPO,
pointing out the untoward consequences  of CL.  They also said that the
activist onslaught will probably lessen after the Seattle WTO meeting.
The RTG would then be stuck with the untoward consequences of bowing to
momentary pressure.

6.  The industry representative also believes that the CL precedents
recently set in South Africa, to which the activist groups are pointing,
are spurious.  The industry had no patent in South Africa, he further
maintains that the argument made by AIDS activists that even in the
country of origin (the U.S.) the companies hold no patent is irrelevant
for the opposite reason.  The USG holds the patent and did not have to
go through the usual patent procedure to obtain it.  The Meyers-Squibb
representative argues that the activist groups want cheap or free drugs
and the GPO wants a transfer of technology and licensing.  He points out
that Thailand already receives these drugs at the second lowest price on
offer world-wide and that a very recent Japanese gift of a four million
dollar shipment of them has stocked clinic inventories fully.  To him
the transfer of technology is the real issue.

7.  Understandably the Pharmaceutical Industry is reluctant to fight
this matter in the media, where the Activist views reign almost
unopposed.  The human cost aspects will outweigh legal and economic
considerations in press treatment, even if the result is that new drugs
do not get to the market.  Eventually, though, the industry may be
forced to change its tactics and perhaps the industry should.  The best
arrow in their quiver is that even though AIDS/HIV medicines are exempt
from tariffs and taxes, the prices of the drugs shoot up considerably
due to hefty mark-ups by official dispensing agencies and private
medical facilities.  In some cases the mark-up about doubles their cost.
  To point this out publicly, however, would be to alienate their own
customers.

8.  Post believes that the question of whether a fee is paid if the CL
clauses is invoked is a crucial factor in this case.  However, the
invokation of a CL for any drug would set a worrisome precedent for the
rest of the drug industry.  We have cautioned the already cautious DIP
about moving on this issue.  We do not believe that action by them is
immanent but we cannot guarantee that.  We will remain in touch with US
industry representatives here and would appreciate guidance from
Washington agencies on how to proceed.

Hecklinger
BT
#3095
--
Joy Spencer
Consumer Project on Technology
P.O. Box 19367
Washington D.C. 20036

1.202.387.8030
1.202.234.5176