[Ip-health] Thai CL sign-on: US asked to cease opposition or interference with the Thai efforts to use WTO flexibilities to buy generic AIDS medicines

[James Packard Love]

This is a letter that will be sent to Honorable Condoleezza Rice,
Secretary of State, and Ambassador Susan Schwab, United States Trade
Representative, asking that the United State cease any opposition or
interference with the Thai efforts to use WTO flexibilities to buy
generic AIDS medicines.   The letter will be sent on Wed, December
20, 2006.

To sign, send your name, title/affiliation, and city/state where you
live or work (something members of Congress like to look at),  to Ben
Krohmal <ben.krohmal@cptech.org>, by Wed, December 20, 2006.

Honorable Condoleezza Rice, Secretary of State
Ambassador Susan Schwab, United States Trade Representative

Dear Secretary Rice and Ambassador Schwab:

We are writing to express our concern that the United States
Department of State and the United States Trade Representative and
have intervened in the decision by the government of Thailand to
issue a compulsory license on patents for the AIDS drug efavirenz,
and to explain why the US government should refrain from such actions.

The US government is reportedly asking the Thai government to engage
in prior negotiation with patent owners before issuing compulsory
licenses.   Not only is this not required under the World Trade
Organization (WTO) rules when the compulsory license is for
government use, it is not required under US law.  What the WTO does
require is that Thailand "promptly" notify the patent owner when it
issues a compulsory license.  Thailand has clearly done this.  The US
government should not be in the business of micro-managing Thailand's
dealing with the patent owners, as long as Thailand abides by its WTO
TRIPS obligations.

In 2001 the United States government and every other member of the
World Trade Organization (WTO) announced the signing of the Doha
Declaration on TRIPS and Public Health.  This historic agreement said:

<start quote>
We agree that the TRIPS Agreement does not and should not prevent
members from taking measures to protect public health. Accordingly,
while reiterating our commitment to the TRIPS Agreement, we affirm
that the Agreement can and should be interpreted and implemented in a
manner supportive of WTO members' right to protect public health and,
in particular, to promote access to medicines for all.

In this connection, we reaffirm the right of WTO members to use, to
the full, the provisions in the TRIPS Agreement, which provide
flexibility for this purpose.
</end quote>

Thailand is obviously trying to do exactly what the Doha Declaration
promised it could. Respecting Thailand's decision to exercise its
right under the Doha declaration is not only a matter of concern for
Thai patients in need of affordable AIDS treatment, but also a matter
of good faith in honoring America's international commitments.[1]

Patient advocates and others who are concerned about the AIDS crisis
have welcomed the compulsory license on efavirenz as a major step
forward for access to AIDS drugs in Thailand.  Thailand has stood out
among developing countries for its efforts to expand treatment
opportunities for AIDS patients, but the high price of newer drugs
like efavirenz is a significant hurdle for the long term
sustainability of AIDS treatment programs in Thailand and other
developing countries.

Experts who are struggling to implement treatment programs in
developing countries have concluded that it is essential to create a
competitive generics market for efavirenz and other newer AIDS drugs
that are patented in Brazil and other markets.[2]

Brazil did not have patents on medicines until 1996.  For those AIDS
drugs invented before 1996, Brazil continues to purchase generic
versions.  This has stimulated entry by generic manufacturers,
driving the prices of active pharmaceuticals ingredients (APIs) down
over time.  For example, the global prices of APIs (per kilo) for
lamivudine (3TC) fell from more than $25 thousand dollars in 1996 to
$5 thousand by 1999, to less than $300 by 2004, illustrating the
dynamic nature of cost savings from generic competition.

In contrast, the global prices for products invented after 1996, and
protected by patent in Brazil, are much more expensive.  This is
because, contrary to popular misconception, Brazil did not issue
compulsory licenses, and for AIDS drugs invented after 1996, only
buys from patent owners at negotiated prices.   In a 2004 study by
the World Health Organization (WHO), the average API prices for six
AIDS drugs purchased as generics by Brazil were $382 to $582 per
kilo.  For another six AIDS drugs that were patented in Brazil, the
average prices for generic APIs were $1,717 to $3,020.  (See table
below).   This illustrates the important role of economies of scale,
and the global impact of decisions by large purchaser to buy (or not
buy) from generic suppliers.

Thailand's decision will have important consequences, not only for
Thailand, but for any developing country that needs to obtain low
cost generic products.  If Thailand follows through and begins to buy
from generic suppliers, it will create a larger global market for
generic products, stimulate competition, and lower prices everywhere
for the newer products.

While the benefits of expanded generic competition are widely
appreciated among experts, many developing countries have been
reluctant to issue compulsory licenses because of fears that the
United States government will oppose such actions and exert pressure.

We note also that the United States is itself a major purchaser of
AIDS drugs in developing countries, through our contributions to
PEPFAR and the Global Fund for AIDS, TB and Malaria.  Thus, any
action by Thailand to create more generic competition for the new
AIDS drugs will benefit the US taxpayers who are shouldering the
burden of these outlays.

Finally, we note that Thailand is among the countries that are
supporting proposals for a treaty on R&D in the World Health
Organization (WHO) new Intergovernmental Working Group on Public
Health and Innovation.  We agree with those who suggest this is a
more appropriate way to address the US interest of sharing the global
costs of medical R&D than policies that raise prices for AIDS drugs
and other essential medicines.

We ask that our government reframe from any opposition or
interference with the Thai efforts to use WTO flexibilities to buy
generic AIDS medicines -- including pressuring or otherwise seeking
to persuade Thailand to engage in negotiations with Merck rather than
proceed to execute the compulsory license it has issued -  and
consider more constructive ways to promote our national interest in
matters concerning innovation and access to medicines.

Sincerely,

AIDS Policy Project, Philadelphia
American Medical Students Association
Center for Health and Gender Equity (CHANGE)
Center for Policy Analysis on Trade and Health (CPATH)
Consumer Project on Technology (CPTech)
Essential Action
Global AIDS Campaign
Health Gap
International AIDS Empowerment
Results USA
Student Global AIDS Alliance

Professor Brook K. Baker, Program on Human Rights and the Global
Economy, Northeastern University, School of Law, Boston
Sean Flynn, Associate Director, Program on Information Justice and
Intellectual Property, American University, Washington College of Law
Kevin Outterson, Professor of Law, West Virginia University

To add your signature, send your name and title/affiliation to Ben
Krohmal <ben.krohmal@cptech.org>, by Wed, December 20, 2006.


2004 Prices of Active Pharmaceutical Ingredients
Comparison of prices when products are purchased as generics in Brazil

             Lowest ($)      Highest($)

     Products Brazil buys as generics
Didanosine (ddI)     450      850
Indinavir (IDV)     285      400
Lamivudine (3TC)     295      480
Nevirapine (NVP)     320      475
Stavudine (d4T)     580      775
Zidovudine (AZT)     360      510
           average     $ 382      $ 582

            Products Brazil does not buy as generics
Abacavir (ABC)     1,500      3,500
Efavirenz (EFV)     1,200      1,600
Lopinavir (LPV)     2,900      4,000
Nelfinavir (NFV)     900      1,400
Ritonavir (RTV)     2,600      4,320
Saquinavir (SQV)     1,200      3,300
           average     $ 1,717      $ 3,020

Source: WHO, Sources and Prices of Active Pharmaceutical Ingredients,
2004.
http://www.who.int/entity/3by5/amds/en/API.pdf

FOOTNOTES

[1]  We note also that USTR has publicly stated that its side letters
in some Free Trade Agreements (FTAs) give countries flexibility to
issue TRIPS-compliant/Doha-fulfilling compulsory licenses.  Efforts
by the U.S. to prevent or reverse the actual granting of such
licenses raises doubts about the credibility of the United States,
making it more difficult for the United States to achieve other
objectives in our FTA negotiations.

[2]  See the August 2006, World Bank Report, "The Economics of
Effective AIDS Treatment: Evaluating Policy Options for Thailand."
Page169 states "by exercising compulsory licensing to reduce the cost
of second line therapy by 90 percent, the government would reduce its
future budgetary obligations by US$3.2 billion discounted through 2025."