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

[James Packard Love]

Clearly PhRMA wants this reporter to imply that the TRIPS requires
prior negotiation for government use licenses to supply medicines to
poor AIDS patients, which is not the case.   Of course, since
reporters and editors so frequently tie compulsory licensing to
health emergencies, some will mistakenly think this is how the TRIPS
works.

There is another issue that I find at some level worth discussing.
Thailand is described here (and elsewhere) as a "middle income"
country.   But what do we mean by middle?  In 2005, the Thai gross
national income was $2,750 per capita.  In the US, it was $43,740, or
SIXTEEN times the Thai figure.  Everyone should reflect on what a 94
percent decrease in income would feel like in the US, and then ask
how much pressure we should be putting on medicine prices in
Thailand.   Jamie

   Jamie

On Dec 18, 2006, at 8:42 AM, jes320@med.nyu.edu wrote:
> 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.
>
>
>
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