[Ip-health] Bangkok Post, Specious Arguments on Thailand's Compulsory Licensing

[B.Baker@neu.edu]

Bangkok Post, April 27, 2007

OPINION / SPECIOUS ARGUMENTS ON THAILAND'S COMPULSORY LICENSING

World's premier law firm goes to bat for Abbott


By Brook K Baker, Sean Flynn And Judit Rius Sanjuan


Baker & McKenzie proclaims itself as the world's leading global law firm,
so it is no surprise that this 3,400-attorney firm with US$1.5 billion in
annual billings would go to bat for another big enterprise, Abbott
Laboratories, now locked in an intense battle with Thailand over the
legality and propriety of a government-use licence issued for
Kaletra/Aluvia (lopinavir/ritonavir), a key Aids medicine, issued on Jan
24, 2007, as seen in the article Compulsory drug licences violate world
trade treaty by Peerapan Tungsuwan and William McKay published in
theBangkok Post on April 23, 2007.


Contrary to its reputation, and more likely for the benefit of its Big
Pharma clients including Abbott, Aventis, Pfizer, Bristol-Myers Squibb, and
Eli Lilly, the Baker & McKenzie attorneys have misread and misrepresented
the WTO TRIPS Agreement and wrongfully concluded that Thailand's licences
are unlawful.


The authors make four TRIPS-related arguments, all of which mischaracterise
the law.


Ms Peerapan and Mr McKay first challenge the proposition that Thailand is
justified in issuing compulsory licences on the grounds that "public health
interest must come before commercial interests", belittling those grounds
as comparable to acquiring beds in private hospitals.


The authors are fully capable of reading Article 31 of the TRIPS Agreement,
which contains no express limitation whatsoever on the grounds upon which a
compulsory licence can be granted. The primacy of public health and public
health's validity as a ground for licensing, for cost-saving reasons or
otherwise, was confirmed in the Doha Declaration on the TRIPS Agreement and
Public Health of November 2001, especially in paragraph 5(b) which reads:
"Each Member has the right to grant compulsory licences and the freedom to
determine the grounds upon which such licences are granted."


Thus, if Thailand wants to conserve resources in its world-renowned
HIV/Aids treatment programme, that decision is 100% lawful.


Next, the two Baker & McKenzie lawyers argue that Thailand's government-use
licences are not for "public, non-commercial use" because they have been
granted to the Government Pharmaceutical Organisation, a publicly-owned
manufacturer and drug distribution agency. Since the licence is allegedly
not for public, non-commercial use, the authors argue that Thailand was
required to negotiate on commercially reasonable terms with the patent
holder before issuing the licence and that it failed to do so.


In making this argument, they acknowledge, as they must, that prior
negotiations are not required for public, commercial use licences; they
fail to acknowledge, however, that Thailand had in fact engaged in
fruitless discussions with patent holders since 2005.


Contrary to the authors' argument, the "public, non-commercial use"
language of Article 31(b) of the TRIPS Agreement is focused on the "use"
made of the licensed product, not who the manufacturer or distributor is.


Here, the use is clear _ Thailand will only use the licensed
lopinavir/ritonavir within its national public health insurance schemes.


Indeed, Abbott will retain its exclusive rights to sell in Thailand's small
private sector where it can continue to charge its exorbitant monopoly
prices. As apologists for Abbott, the authors would have us believe that
licensees such as the GPO cannot make medicines for profit (not true), or
that it is cheating when a locally-owned public manufacturer makes or
imports a licensed product from abroad (nothing could be further from the
truth). The compulsory licensing provisions of Article 31 permit licences
to be granted to public or private, and domestic or foreign entities.


The author's third argument is that the .05% royalty rate is unlawful
because it is not adequate and because it does not take into account the
"economic value of the authorisation". The authors continue with a truthful
observation that customary royalty are higher elsewhere. While it is true
that royalty must be set fairly, TRIPS merely requires a review remedy if
the patent holder feels the royalty is inadequate.


Section 51 of the Patent Act provides for such an appeal, and in fact
Thailand has invited Abbott to several meetings to discuss the royalty.
Instead of appealing, however, Abbott has now decided to boycott royalty
rate setting discussions.


The authors' final argument about the "individual merits" of licences is
plainly preposterous. Once again arguing that prior negotiations are
required, the high-powered lawyers argue that Thailand cannot consider any
licence on its individual merits if it has not engaged in "prior
consultations with the affected party".


Contrary to their claim, Thailand unsuccessfully engaged in such
discussions for several years. More to the point, however, the TRIPS
Agreement expressly permits issuance of licences for emergencies, matters
of extreme urgency, and public, non-commercial use without prior
negotiations (Article 31(b)). Pursuant to this international standard and
in compliance with its own law, 28 US C sec 1498(a) and US Executive Order
12889 , the US and its contractors routinely issue public, non-commercial
use licences without prior notice or negotiation, for example to military
hardware patents for its favoured defence contractors Lockheed-Martin and
Halliburton.


These highly skilled lawyers are not stupid and they do know how to read.
They must be well aware of the authoritative scholarly interpretations of
the TRIPS Agreement, which clearly do not support their specious arguments.


However, high fees can buy twisted logic. Here, the false arguments
threaten to obscure the legality of Thailand's compulsory licences and by
necessary extension threaten access to life-saving medicines.


In the US legal system, we have sanctions for frivolous arguments. Here the
authors are seeking to mislead the court of public opinion rather than a
judicial tribunal. That may make their offence even worse.


Professor Brook K Baker is with Health GAP (Global Access Project),
Northeastern University School of Law; Sean Flynn is Associate Director of
the Programme on Information Justice and Intellectual Property, Washington
College of Law; and Judit Rius Sanjuan is with Knowledge Ecology
International (KEI) in Washington DC. Professor Brook K. Baker, Health GAP