[Ip-health] PHRMA CRITICIZES THAILAND COMPULSORY LICENSE FOR HIV/AIDS DRUG

[jes320@med.nyu.edu]

PHRMA CRITICIZES THAILAND COMPULSORY LICENSE FOR HIV/AIDS DRUG
8 December 2006
Inside U.S. Trade
Vol. 24, No. 49
www.InsideTrade.com.

U.S. pharmaceutical companies are criticizing Thailand's decision last week to
issue a compulsory license for the production of efavirenz, an anti-retroviral
drug used to treat HIV/AIDS that is known as Stocrin in Thailand and Sustiva in
the U.S. and Europe. Thailand announced last week it would issue the license to
allow the production in Thailand of a generic version of efavirenz, and that
until its generic firms are able to produce the drug it would immediately begin
importing generic efavirenz from India.

Thailand said it would pay a royalty fee of 0.5 percent of the total sale value
of the imported or domestically produced generic drug to Merck, the U.S.
company that owns the patent to efavirenz. It said the license would extend
until Dec. 31, 2011, and that provision of the generic drug would be limited to
200,000 patients annually.

More than 500,000 people in Thailand have HIV/AIDS, according to the government,
although sources from non-governmental groups such as Oxfam and Doctors Without
Borders said the number is actually much higher. Thai officials said patients
would receive the generic version of efavirenz for $20 per month, half the $40
per month it now costs to purchase the drug from Merck.

"With this higher price, the budget allocated from the Thai government can only
cover some patients with efavirenz, whereas the rest has to use other
non-patented more toxic anti-retrovirals," the government said in an
announcement last week.

Thailand is acting under Article 31 of the Agreement on Trade-Related Aspects of
Intellectual Property Rights in issuing the compulsory license. This article
allows WTO members to use a patented product without the authorization of the
patent holder, but imposes certain conditions on the use, including the payment
of adequate remuneration to the patent holder. It also requires authorization to
be terminated if and when the circumstances allowing the issuance of the license
cease to exist.

Countries using Article 31 are supposed to make efforts to obtain authorization
from the rights holder on reasonable commercial terms and conditions for a
reasonable period of time, but this requirement can be waived in cases of
national emergency or other circumstances of extreme urgency, or in cases of
public non-commercial use. If this waiver is used, Article 31(b) requires that
the rights holder be notified of the compulsory license "as soon as reasonably
practicable."

However, Thailand's announcement does not mention that a national emergency has
been declared in the country, and other sources said they were unaware of a
declaration. Without one, they said Thailand should have been required to
negotiate with Merck. It is also not clear if Thailand considers this
compulsory license to be issued for public non-commercial use of efavirenz.
This raises questions, according to some observers, over whether Thailand is
facing a crisis, or whether it wants to increase its production capacity for
certain drugs.

In its announcement, Thailand cited a 2001 declaration by WTO members at the
Doha ministerial as underlining its right to issue a compulsory license to
safeguard and protect public health, "especially for universal access to
essential medicines." The declaration states that members have the right to
determine what constitutes a national emergency or other circumstances of
extreme urgency, and that it is understood that public health crises such as
HIV/AIDS can represent a national emergency.

Merck and the Pharmaceutical Research and Manufacturers of America criticized
Thailand for not making any effort to negotiate a fair price with Merck, but
did not suggest that Thailand was running afoul of TRIPS requirements. "The
recent announcement by Thailand's Ministry of Health to issue a compulsory
license without any attempt to negotiate with the patent owner is of grave
concern," PhRMA President Billy Tauzin said in a Dec. 1 statement.

Tauzin charged that this appeared to be inconsistent with the procedures of
Thailand's patent statute, which an industry source said requires Thailand to
negotiate with the patent holder. However, this source agreed that WTO rules
would not require Thailand to negotiate with Merck before issuing the license.

In a separate statement, Merck said it had been providing efavirenz to the Thai
government at prices that are lower than anywhere in the world, and complained
that it was not approached to discuss any aspect of the Thailand government's
announcement of the compulsory license prior to that announcement being made.

Merck also said it had never had a problem meeting Thailand's supply needs for
efavirenz and that it could meet future supply needs if given the opportunity.
NGO sources disputed this statement by saying Thailand had been frustrated with
insufficient supplies from Merck.

The Office of the U.S. Trade Representative is seeking further details on the
announcement, an official said. While Thailand is permitted under WTO rules to
issue a compulsory license subject to certain conditions, the official said
USTR encouraged Thailand to work with Merck to reach an outcome "in the best
interests" of the Thai people. It said it understood patent holders had
requested a meeting with the relevant Thai officials and that "it would be
appropriate for the Thai government to be responsive to such a request."

In an interview with Medicins Sans Frontieres posted on the MSF web site, Dr.
Suwit Wibulpolprasert, a senior advisor on health economics at the Thailand
Ministry of Health, said Thailand initially planned to import efavirenz from
India before producing it at plants in Thailand.

Suwit said Thailand also needed to move to the use of efavirenz because of side
effects patients were experiencing to other drugs that are already off patent.
He said about 120,000 people in Thailand are on anti-retrovirals (ARVs), with
most taking nevirapine, the standard first line medicine available generically,
which he said costs about a third the price of efavirenz. He said about 20 to 25
percent of patients cannot take these drugs due to side effects, which he said
where sometimes fatal, and that these patients must be switched to efavirenz.

In the future, Suwit said, Thailand hopes to replace all of the nevirapine-based
formulation with efavirenz.

MSF and other non-governmental organizations said the news that Thailand was
issuing a compulsory license for the first time was significant for several
reasons. While other countries have issued compulsory licenses, Thailand is
unique in that it is a middle-income country with a large population with
HIV/AIDS, and is also seen as being a leader among developing countries in
tackling HIV/AIDS because of its domestic policies, they said.

Thailand has a policy of providing universal access to ARVs for all HIV postive
patients who need it, and patients under the scheme get the drugs for free,
Suwit said.

Pharmaceutical companies "want to hold on to middle-income countries" and do not
want to see them issuing compulsory licenses, one NGO source said. This makes
Thailand different from some African countries that have issued compulsory
licenses, the source said.

"What is wrong with wanting to want to have access to middle income countries?"
one industry source asked in response. Pharmaceutical companies say the prices
they charge for patented drugs pay for research and reward innovative new
drugs, which spurs new inventions and ultimately better health care. Thailand's
announcement said it had a budget of 2,796.2 million baht (about $78.6 million)
for a target group of 82,000 patients with HIV/AIDS in the 2006 fiscal year.

NGOs are hopeful that Thailand's decision will lead other middle-income
countries such as Brazil and South Africa to issue compulsory licenses. Brazil
last year threatened to issue a compulsory license for an AIDS drug, but
appeared to use this threat as leverage to get the patent holder to lower the
price of the drug.

NGO groups do not like these agreements, which they say are non-transparent and
can impose burdensome conditions on the use of the drug.

It is also significant that Thailand is issuing a compulsory license for the
production of efavirenz, which is seen as a border-line "second-line" drug.
First-line drugs are those generally not covered by patents in developing
countries, but some second-line drugs, such as efavirenz in Thailand, are
covered by patents.

As more patients develop resistances to first-line and even second-line drugs,
it is expected that more will need the use of second or third-line drugs, which
are generally covered by patents. This problem is expected to grow now that
India, the largest generic drug producer, has passed legislation to implement
the TRIPS agreement.



----------------------------------------------------------------
This message was sent using IMP, the Internet Messaging Program.