[Ip-health] IHT: Thailand defies drug makers on patent issue

[Judit Rius Sanjuan]

International Herald Tribune/Business article

http://www.iht.com/articles/2007/04/11/news/pharma.php

Thailand defies drug makers on patent issue
By Thomas Fuller
Wednesday, April 11, 2007

*BANGKOK:* When Thailand announced earlier this year that it was
breaking patents on drugs to treat HIV and heart disease, Western
pharmaceutical companies reacted with fury.

Abbott, the maker of the AIDS drug Kaletra, took the radical step of
withdrawing all of its new products from Thailand, depriving Thais of
access to new drugs for rheumatoid arthritis, kidney disease, heart
disease and high blood pressure.

"Thailand has chosen to break patents on numerous medicines, ignoring
the patent system," said Jennifer Smoter, a spokeswoman for Abbott,
which is based near Chicago. "As such, we've elected not to introduce
new medicines there."

But two months after the uproar began, there are signs that Thailand has
gained the upper hand. Its aggressive stance could be paving the way for
other developing countries to extract lower drug prices from
pharmaceutical giants in Europe and the United States.

Abbott announced Tuesday that it would slash the price of Kaletra in
low-and medium-income countries, including Thailand, to $1,000 a patient
per year. That is cheaper than any generic on the market and 55 percent
less than the current price, the company said.

The Swiss drug company Novartis offered an effective 75 percent price
reduction this week in its leukemia medicine, Glivec, after Thai
officials said they were studying a compulsory license on the drug,
which would have allowed the government to produce it in its own
factories and distribute it on a nonprofit basis.

Merck, the U.S. drug maker, has also offered to cut the price of its HIV
drug, Efavirenz, here after the Thai government announced it would break
the patent for that drug last November.

Drug companies say they fear a spread of Thailand's confrontational
strategy.

"We don't want Thailand to be used as a springboard for other countries
to do the same," said Teera Chakajnarodom, president of the
Pharmaceutical Research and Manufacturers Association, an industry group
in Bangkok.

To bring drug companies to the negotiating table, Thai officials used as
a bargaining chip a World Trade Organization rule introduced in the
1990s. The rule, part of the Agreement on Trade-Related Aspects of
Intellectual Property Rights, or Trips, gives countries the right to
break a patent and either produce the drug themselves or import generics
from other countries.

Many countries, including Brazil, Indonesia, Malaysia, Mozambique and
Zambia, have broken or have threatened to break patents on drugs for HIV
and other infectious diseases.

What is new in Thailand's case is the broader categories of drugs that
the government is targeting.

A groundbreaking case was the compulsory license for Plavix, a
blood-thinning drug developed by Sanofi-Aventis of France and marketed
by the U.S. company Bristol-Myers Squibb.

Plavix is designed to help prevent heart attacks and strokes. The
pharmaceutical industry says the spirit of the WTO rule is being
violated: It should be used for national emergencies like AIDS or other
fast-spreading infectious diseases, the industry argues.

An industry lobby group, the Pharmaceutical Research and Manufacturers
Association of America, has urged the U.S. government to put Thailand on
its list of the worst violators of intellectual property, an annual
classification issued by the U.S. Trade Representative's Office and due
later this month.

"Compulsory licensing should be the last resort, when there is no other
alternative," Teera, of the Thai lobby group, said. "The minister of
public health is using compulsory as a tool to force the companies to
reduce the price."

Exactly right, say Thai officials.

"People told us, 'It's useless to negotiate with them unless you start
to announce that you want to go for compulsory licensing. Then they
start to talk to you,' " said Suwit Wibulpolprasert, a senior adviser on
disease control at the Thai Ministry of Public Health.

"We learned that lesson," Suwit added. "After we announced our intention
to implement compulsory licensing they knocked at our door almost every
day."

Drug companies were stunned by the quick succession of the compulsory
licenses - and worried about the threat of more, said Paul Cawthorne,
the head of M=E9decins Sans Fronti=E8res, the medical charity, in Thailand.

"It's panicked some of the companies here, thinking, 'Oh God, they are
really going to go crazy here and issue lots and lots of CLs and maybe
other countries will follow suit,' " Cawthorne said, using the shorthand
for compulsory licenses.

In a detailed report explaining their decision, Thai officials included
a quote from Albert Einstein: "We shall require a substantially new
manner of thinking if mankind is to survive."

But in practice, the strategy may be nothing more than using the WTO
rule as leverage for some old-fashioned haggling. Analysts say the
government may not even intend to produce its own drugs. Officials note
that they have not started production.

"Our door is never closed," said Health Minister Mongkol na Songkhla,
who is heading to the United States later this month to explain the
government's drug policies. "We are willing to discuss. We are willing
negotiate."

The WTO rules are vaguely worded: Governments can act in cases of
national emergencies. But a declaration in 2001 by WTO members also
gives countries the "freedom to determine the grounds upon which such
licenses are granted."

In forging their more aggressive approach toward drug companies, Thai
health officials had plenty of room to maneuver in the tumultuous
political atmosphere that has reigned in Thailand since the military
coup that ousted a civilian government in September.

The current, military-appointed government has shown little reluctance
to take bold and controversial measures, such as capital controls and
crackdowns on foreign ownership of companies.

After breaking the patents, Thai officials received support and plaudits
from many global health organizations, including M=E9decins Sans
Fronti=E8res, the Clinton Foundation and Unaids, the UN agency charged
with helping tackle the disease. People from these organizations say
Thailand is taking advantage of an underused provision in international
law that could help save lives.

Support and sympathy for Thailand among health advocates also rose after
Abbott announced its partial boycott in March. M=E9decins Sans Fronti=E8res
called the decision to withhold new drugs "appalling."

Some of Abbott's investors also protested the move. Christian Brothers
Investment Services and members of the Interfaith Center on Corporate
Responsibility, who together own $35 million in Abbott shares, said they
were concerned that the company's actions might damage its reputation.

"To our knowledge, no pharmaceutical company has before withdrawn AIDS
drugs in response to a pricing or licensing dispute," the groups said in
a statement. "By keeping life-saving medicines like Kaletra off the
shelves in Thailand, Abbott Labs is threatening the health of Thais who
need access to these drugs for survival."

The group also said Abbott's move could damage the company's "brand, its
relationships with patients, and ultimately, shareholder value."

Abbott has reduced the price of its Kaletra capsules, an older form of
the drug that requires refrigeration, but not its more recent tablets,
which are better suited for Thailand's hot climate. Thai officials said
Wednesday it would be days before the government decided whether
Abbott's price reduction would forestall compulsory licensing.

By breaking the patent on Kaletra, the Thai government estimates it
would save 8,000 lives, by making possible distribution to people who
cannot afford it through the country's public health care system.

The Pharmaceutical Research and Manufacturers Association of America
argues that U.S. consumers are unfairly carrying the burden of financing
research for the rest of the world.

"Americans are effectively subsidizing other countries' health systems
through higher prices, while having fewer medicines from which to
choose," the group said in its complaint to the U.S. government.

Suwit, the Health Ministry official, advises drug companies to learn
from what he describes as a Chinese proverb: "Less profit means more
profit."

"If you sell at a lower profit per piece," he said, "people will consume
more."

--
Judit Rius Sanjuan
Attorney
judit.rius@keionline.org

Knowledge Ecology International (KEI)
www.keionline.org / www.cptech.org
1621 Connecticut Ave, NW, Suite 500 Washington, DC 20009 USA
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