[Ip-health] Bridges Weekly: THAILAND ISSUES COMPULSORY LICENCE FOR PATENTED AIDS DRUG

[Thiru Balasubramaniam]

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[ Picked text/plain from multipart/alternative ]

http://www.ictsd.org/weekly/index.htm

BRIDGES Weekly Trade News Digest - Vol. 10, Number 42 13 December 2006

THAILAND ISSUES COMPULSORY LICENCE FOR PATENTED AIDS DRUG

Thailand's military-backed government on 29 November issued a
compulsory licence for Merck's HIV/AIDS drug efavirenz, in an attempt
to cut growing healthcare costs by encouraging the production and
import of generic versions of the patented medicine.

The Thai ministry of public health authorised the Government
Pharmaceutical Organisation to manufacture generic versions of the drug
until 2011, and to import generics from India until domestic production
comes on line. It specified that the medicines were to be used for the
country's widely-praised national HIV/AIDS treatment programme. Bangkok
stressed that the decision was in accordance with WTO rules on access
to medicine, specifically citing the 2001 Doha Declaration on the TRIPS
Agreement and Public Health, which permits compulsory licensing for
"emergency cases and public uses."

While other developing countries such as Zambia and Indonesia have
issued compulsory licences for HIV/AIDS drugs in the past, the Thai
move is significant for its longer duration and the fact that it opens
the door to competitive imports of generics from India. Both steps will
mean increased downward pressure on drug prices, according to public
health advocates, who praised the government's decision.

US-based global pharmaceutical giant Merck, which owns the patent on
efavirenz and markets it under the name Stocrin, was less enthusiastic.
The company's local subsidiary, MSD Thailand, complained in a statement
that the Thai government did not approach it to discuss the compulsory
licence decision prior to the announcement itself. According to a
report in the Financial Times, Merck found out about the decision two
days prior to the announcement, although it had expected a 90-day
consultation period. MSD Thailand added that it was already providing
efavirenz, a 'second-generation' antiretroviral drug, to Thailand "at
one of the lowest prices available in the world."

The Thai government counters that while Merck's Stocrin treatment
currently costs 1,500 bahts or USD 41 a month in Thailand, Indian
generic efavirenz would cost roughly half as much, or 800 bahts (USD
22). The compulsory licence would thus help rein in the ballooning cost
of providing efavirenz to patients through the country's universal
HIV/AIDS treatment scheme. According to M=E9decins sans Fronti=E8res, at
least 12,000 HIV/AIDS patients in Thailand currently require the drug
due to an intolerance to one of the components in the generic triple
drug cocktail provided by the government. That number is expected to
rise sharply as patients now treated with generics already off-patent
will start requiring second-line medicines such as efavirenz to
survive.

As per the terms of the licence, it will be limited to the provision of
efavirenz to no more than 200,000 people a year, and the Government
Pharmaceutical Organisation will pay Merck a royalty fee of 0.5 percent
of the total sale value of the imported or locally-produced generic.

In language even more critical than that used by Merck, Pharmaceutical
Research and Manufacturers of America (PhRMA) President and CEO Billy
Tauzin said the announcement to issue a compulsory license "without any
attempt to negotiate with the patent owner [was] of grave concern" and
appeared "to be inconsistent with the procedures in Thailand's own
patent statute."

Compulsory licence appears to be WTO consistent

Pharmaceutical companies may be focusing on Thai domestic legislation
because they have "no case under the TRIPS Agreement, or otherwise
under WTO rules," says Frederick Abbott, a professor of international
law at Florida State University. Bangkok's decision appears to be in
full compliance with the requirements for compulsory licences set out
in WTO law.

The WTO Agreement on Trade-related Aspects of Intellectual Property
Rights (TRIPS), in Article 31(b), explicitly states that governments do
not need to consult with patent holders when issuing a compulsory
licence for national emergencies or public non-commercial use. Abbott
pointed out that Bangkok has stressed that it is seeking to address a
public health emergency, and that the efavirenz produced or imported
under the licence will be used for the government's non-commercial
public treatment programme. Notably, US law does not require prior
negotiations before the government may use a patent without the consent
of the patent holder.

Nor does it appear that Thailand or India would have to make use of a
2003 agreement, the so-called '30 August 2003 decision,' that spelled
out the complex conditions under which WTO Members are allowed to
export drugs produced under compulsory licence.

According to published reports, efavirenz is not patented in India,
since New Delhi only started granting patents to pharmaceutical
products in early 2005, when it came into full compliance with the
TRIPS Agreement (see BRIDGES Weekly, 23 March 2005,
http://www.ictsd.org/weekly/05-03-23/story1.htm). The Indian government
would thus not have to issue a compulsory licence for the export of the
drug.

Following Bangkok's announcement, Merck said that it might seek to
negotiate with the Thai government to agree on a 'voluntary licence'
for the generic production of efavirenz, or offer it a lower price for
drug.

The American Chamber of Commerce in Thailand said that Bangkok's
decision to authorise the production of generic copies of Merck's
patented drug would send a 'negative signal' to foreign investors.

Sources report that Deputy US Trade Representative Karan Bhatia
contacted the Thai ambassador in Washington to criticise the compulsory
licence decision.

M=E9decins sans Fronti=E8res, on the other hand, urged Bangkok to go
further. "Thailand is demonstrating that the lives of patients have to
come before the patents of drug companies, and this policy needs to be
expanded to essential drugs that are expensive and in short supply,
such as the AIDS drug lopinavir/ritonavir, which currently costs over
7,000 baht a month (USD 194) and is far too expensive for Thailand,"
said David Wilson, a doctor with the organisation.

ICTSD reporting; "Thailand breaks Aids patent to cut costs," 30
November 2006; "Merck to cut Aids drug price in Thailand," FINANCIAL
TIMES, 1 December 2006; "Thai drug move sends 'negative' signal to
investors," REUTERS, 1 December 2006.

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Thiru Balasubramaniam
Geneva Representative
CPTech
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@cptech.org
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