[Ip-health] Asia Sentinel: Thailand’s Bittersweet Victory over Big Pharma

[Thiru Balasubramaniam]

<SNIP>

Abbott said the move was necessary because it had under-priced the drug
for years, but the Wall Street Journal reported earlier this year that
the price spike was done to increase the price of two rival drugs taken
in conjunction with Norvir, which would result in more sales of its own
Kaletra. Internal company documents warned the move would make Abbott
look like a “big, bad, greedy pharmaceutical company,” according to the
Journal, but Abbott executives reportedly thought the profits gained
would outweigh any short-term controversy.

The price increase is now the subject of an anti-trust lawsuit in US
federal court. The Democrat-controlled House of Representatives also
may open hearings on whether Abbott artificially inflated Norvir’s
price, The Hill, a Washington DC-based newspaper, reported last month.

<SNIP>

Thailand will not get Aluvia or other new drugs, however, because “the
Thai action does not support long-term research and development,”
Melissa Brotz, an Abbott spokeswoman, said in an interview.

“The developing world pays a significant amount for innovation and
middle-income countries will have to pay some share,” she said. “Our
position is that nations need to pay their share of innovation costs.
If 10 or 15 years ago people didn’t respect patents, these drugs
wouldn’t be available today.”

<SNIP>

Moreover, the World Bank stated in a report last August that Thailand
should resist pressure from Big Pharma and use compulsory licenses to
help bring down its drug costs.

“Because the drugs used in second-line therapy are patented, produced,
and sold by multinational pharmaceutical corporations, Thailand must
either pay the high prices demanded by those monopolies or exercise its
rights under World Trade Organization (WTO) treaties to grant a
compulsory license for the manufacture of the drug, subject to
negotiated royalties,” the report said.

It adds: “Because Thailand stands to gain a great deal from bilateral
agreements to reduce trade barriers with trading partners such as the
United States, the Royal Thai government may be tempted to relinquish
its rights to grant compulsory licenses for AIDS drugs in exchange for
proffered trade advantages. The report finds that the cost of such
concessions would be large.”

The World Bank said Thailand could cut the costs of second-line
HIV/AIDS therapy by 90 percent, or $3.2 billion, through 2025 by
issuing compulsory licenses.

<SNIP>

The WHO is similarly ambiguous on the matter. When asked if the WHO
supported Abbott’s move to withdraw Aluvia from Thailand, spokeswoman
Christine McNab referenced a portion of Abbott’s press release, which
states: “Specifically, with regard to Thailand, Abbott appreciates and
fully respects the suggestion of Director-General Chan that more work
needs to be done with the government of Thailand to achieve a positive
outcome.”

“The issue is now one for Abbott and Thailand to work through the
details,” she added.

<SNIP>

If Aluvia is not offered in Thailand, the WHO-brokered deal with Abbott
will also have the effect of deterring countries in the future from
following the TRIPS agreement and issuing compulsory licenses for
essential drugs.

Though Abbott’s strategy may be to isolate Thailand by providing 44
other middle-income countries with much cheaper Aluvia, the dispute
itself affects every country. For if Thailand is punished simply for
doing what the TRIPS agreement says is legal, then essentially those
multilateral deals are nothing more than meaningless pieces of paper,
and the debate over intellectual property rights moves back to square
one.

“This case shows that if a country tries to use the TRIPS agreement
then they will be really hit hard by the pharmaceutical industry,” said
MSF’s Cawthorne. “It brings into question whether the whole thing is
dead in the water.”

----------------------------------------------------------------


Thailand’s Bittersweet Victory over Big Pharma
Daniel Ten Kate
13 April 2007

Thailand takes one for the team on AIDS drugs


India, Pakistan, Brazil, China, Indonesia, Ukraine and governments from
nearly 40 other countries can all thank Thailand government for cheaper
prices of Abbott Laboratories’ anti-AIDS drugs Kaletra and Aluvia.

The US-based pharmaceutical company announced Wednesday it would slash
the price of the second-line antiretrovirals for 45 low and
middle-income countries to $1,000-per-patient per year from $2,200
previously.

The agreement, brokered after World Health Organization (WHO)
Director-General Margaret Chan recently approached Abbott, appears at
first glance to signal a victory for Thailand in its ongoing dispute
with the company over its drug prices but in fact Thailand is paying a
price for its action.

The row started in January when Thailand announced it would issue a
compulsory license for Kaletra, as it had previously done with other
antiretrovirals and the heart disease drug Plavix. Abbott quickly
responded by pulling registrations for seven new drugs in Thailand,
including Aluvia, a heat-stable form of Kaletra that eliminates the
need for refrigeration — crucial for AIDS patients in a warm weather
climate.

But although Thai patients will be able to receive Kaletra at the new
$1,000 price, Abbott is still singling Thailand out by refusing to
register Aluvia in the country, which means Thai patients can’t access
the drug at all. By doing so, Abbott is punishing Thailand for
exercising its rights under the World Trade Organization's agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS), while
some 44 other middle-income countries reap the benefits of its bold
moves.

“It’s not just that Thailand threatened to issue compulsory licenses,
but it actually went ahead and signed them,” said Paul Cawthorne, the
head of mission for Medecins Sans Frontieres (MSF) in Bangkok. “Brazil
threatened a compulsory license and received a price reduction for
itself. Thailand issued a compulsory license and got a worldwide price
reduction. Certainly it was a PR disaster when Abbott said it would
pull its drugs from Thailand, and now they are trying to scrape
themselves back. Other countries around the world should be thankful to
Thailand, even though Thailand is still suffering.”

Abbott has developed a reputation over the years as one of the toughest
negotiators on HIV/AIDS drugs. In 2004, the Chicago-based company
stunned AIDS patients around the globe — and some of its own
shareholders — when it said it would raise the price of the
antiretroviral Norvir by 400 percent.

Abbott said the move was necessary because it had under-priced the drug
for years, but the Wall Street Journal reported earlier this year that
the price spike was done to increase the price of two rival drugs taken
in conjunction with Norvir, which would result in more sales of its own
Kaletra. Internal company documents warned the move would make Abbott
look like a “big, bad, greedy pharmaceutical company,” according to the
Journal, but Abbott executives reportedly thought the profits gained
would outweigh any short-term controversy.

The price increase is now the subject of an anti-trust lawsuit in US
federal court. The Democrat-controlled House of Representatives also
may open hearings on whether Abbott artificially inflated Norvir’s
price, The Hill, a Washington DC-based newspaper, reported last month.

For Kaletra, Abbott said in a statement this week, that it lowered the
price “to further increase access and address the debate around pricing
of HIV medicines: by increasing affordability while preserving the
system that enables the discovery of new medicines.”

Thailand will not get Aluvia or other new drugs, however, because “the
Thai action does not support long-term research and development,”
Melissa Brotz, an Abbott spokeswoman, said in an interview.

“The developing world pays a significant amount for innovation and
middle-income countries will have to pay some share,” she said. “Our
position is that nations need to pay their share of innovation costs.
If 10 or 15 years ago people didn’t respect patents, these drugs
wouldn’t be available today.”

Brotz also flatly denied that Abbott’s move to reduce the price of
Kaletra in 45 countries was related to Thailand’s decision to issue a
compulsory license for the drug, despite the conspicuous timing and
increased calls for renewed boycotts of Abbott products. Two years ago,
Abbott offered Brazil a discount on Kaletra after it threatened to use
a compulsory license, but the price was not disclosed.

“This is not in response to Thailand,” she said. “We are always
evaluating pricing with regards to changes in the environment.”

Perhaps most importantly, Brotz declined to comment when asked if
Thailand’s move to issue a compulsory license for Kaletra was legal
under the WTO’s TRIPS agreement. “I don’t think we’re going to comment
on TRIPS,” she said.

Indeed, Thailand’s recent moves to issue a compulsory license for
Kaletra and other drugs — like Merck’s antiretroviral Efavirenz and
Plavix, a blood-thinning drug marketed by US company Bristol-Myers
Squibb — are completely legal under TRIPS.

The agreement clearly says countries have the right to issue compulsory
licenses in cases of national emergency, extreme urgency, or public
non-commercial use. The WHO’s Chan, who brokered the deal with Abbott,
even wrote the Thai government in January to say its decision to issue
compulsory licenses was “fully in line with the TRIPS agreement.”

Moreover, the World Bank stated in a report last August that Thailand
should resist pressure from Big Pharma and use compulsory licenses to
help bring down its drug costs.

“Because the drugs used in second-line therapy are patented, produced,
and sold by multinational pharmaceutical corporations, Thailand must
either pay the high prices demanded by those monopolies or exercise its
rights under World Trade Organization (WTO) treaties to grant a
compulsory license for the manufacture of the drug, subject to
negotiated royalties,” the report said.

It adds: “Because Thailand stands to gain a great deal from bilateral
agreements to reduce trade barriers with trading partners such as the
United States, the Royal Thai government may be tempted to relinquish
its rights to grant compulsory licenses for AIDS drugs in exchange for
proffered trade advantages. The report finds that the cost of such
concessions would be large.”

The World Bank said Thailand could cut the costs of second-line
HIV/AIDS therapy by 90 percent, or $3.2 billion, through 2025 by
issuing compulsory licenses.

Although the September coup has indefinitely stalled bilateral trade
talks with the US, Abbott’s moves to pull some drugs demonstrates the
ramifications of actually seeking to implement the protections offered
by the WHO. Abbott is quick to accuse Thailand of disregarding the
patent system, but it refuses to acknowledge that the government’s
actions are perfectly consistent with a multilateral agreement dealing
with intellectual property rights that was signed by the United States
and every other WTO member.

The WHO is similarly ambiguous on the matter. When asked if the WHO
supported Abbott’s move to withdraw Aluvia from Thailand, spokeswoman
Christine McNab referenced a portion of Abbott’s press release, which
states: “Specifically, with regard to Thailand, Abbott appreciates and
fully respects the suggestion of Director-General Chan that more work
needs to be done with the government of Thailand to achieve a positive
outcome.”

“The issue is now one for Abbott and Thailand to work through the
details,” she added.

Maybe Abbott will come around and register the drug in Thailand, but
it’s unclear what incentive it will have to do so. It took the
international pressure off its back by lowering drug prices in many
countries that would normally be sympathetic towards Thailand’s plight,
and even received a stamp of approval from the WHO. If Aluvia is not
offered in Thailand, the WHO-brokered deal with Abbott will also have
the effect of deterring countries in the future from following the
TRIPS agreement and issuing compulsory licenses for essential drugs.

Though Abbott’s strategy may be to isolate Thailand by providing 44
other middle-income countries with much cheaper Aluvia, the dispute
itself affects every country. For if Thailand is punished simply for
doing what the TRIPS agreement says is legal, then essentially those
multilateral deals are nothing more than meaningless pieces of paper,
and the debate over intellectual property rights moves back to square
one.

“This case shows that if a country tries to use the TRIPS agreement
then they will be really hit hard by the pharmaceutical industry,” said
MSF’s Cawthorne. “It brings into question whether the whole thing is
dead in the water.”

---------------------------------
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org