[Ip-health] Roger Bate in the Wall Street Journal: Thai-ing Pharma Down

[Thiru Balasubramaniam]

Roger Bate's assertion that Thailand's issuance of a compulsory licence
for Plavix "breaks WTO rules" is misleading.

The Doha Declaration on the TRIPS agreement and public health
(WT/MIN(01)/DEC/2)   is quite clear (para 5(b) that:

"[e]ach member has the right to grant compulsory licences and the
freedom
to determine the grounds upon which such licences are granted."

http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm

Thiru Balasubramaniam


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

<SNIP>

"This is probably not just empty rhetoric. Thailand's move to issue a
compulsory license for a heart disease drug, Plavix, changes the debate
entirely. The Health Minister said cutting the price for Plavix from 70
baht ($2) to 6 baht per pill would increase use above the 20% of
patients needing the drug that he estimates currently have access. But
while this is understandable, it almost certainly breaks WTO rules.
Combating HIV has always been seen by activists, if not others, as a
health emergency, and under WTO rules, patents can be broken in
emergencies. However, it's hard for anyone to argue that heart disease
meets such stringent tests."

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


http://online.wsj.com/article/SB117097253219602827.html

Thai-ing Pharma Down
By ROGER BATE
February 9, 2007


Thailand's government took the rare and damaging step of overriding
patents on key Western medicines for HIV/AIDs and heart disease last
week. Bangkok will start using cheaper copies of the drugs and label
them generic equivalents. The move was celebrated by AIDS activists and
non-governmental organizations, one of whom characterized it as "world
war three." But Thai patients are sure to lose in this war, as might
western pharmaceutical companies. The only winner will be Thailand's
historically corrupt Government Pharmaceutical Organization, or GPO,
the state-owned pharmaceutical monopoly.

Thailand's health ministry plans to issue compulsory licences,
permitted under World Trade Organization rules, to buy local copies of
Sanofi-Aventis's heart disease drug Plavix and Abbott's HIV treatment
Kaletra. The government will then license the drug to GPO, which will
start producing it and selling it to Thai doctors and hospitals. This
isn't the first time that Bangkok has violated patent rights. The
threats to Abbott's and Sanofi's intellectual property are in addition
to those made against the patents of Merck's HIV drug Stocrin last
November.

These moves are far from the boon to patients they're made out to be.
The GPO facilities used to manufacture HIV treatments have not passed
the World Health Organization's manufacturing standards. In the
industry jargon, there is no decent "bioequivalence data" on the
quality of GPO-manufactured drugs, meaning that they are at best
approximate copies and should not be labeled generics. Furthermore,
even WHO standards have been lax, with 18 different "WHO approved" HIV
treatments withdrawn in 2005 -- after use on thousands of patients --
due to lack of proof the drugs actually worked.

While WHO standards have improved since 2005, one cannot be so sure of
the GPO. Lembit Rago, WHO's coordinator of drug quality and safety put
it starkly recently: "Nobody would buy an airplane without
wings....Drugs should be treated the same way. But with drugs it's
difficult to understand what makes them up to a certain standard of
quality because there are so many elements involved. In certain cases,
minor things are wrong, and in some major things. Drugs that are not
pre-qualified [WHO approved] may not directly kill people, but they
could foster resistance to AIDS drugs."

GPO's products are not pre-qualified. As to fostering drug resistance,
a 2005 study by Thailand's Mahidol University's faculty of medicine
found that GPO-vir, a copy HIV treatment GPO makes, had between 39.6%
and 58% resistance in the 300 patients investigated. This result is
perhaps the worst case of HIV drug resistance in the world. These
patients should already have moved to second-line treatment -- the next
generation of drugs -- which requires expensive hospitalization.

Drug resistance is almost certainly contributing to rising costs, as
some patients receive high quality patented second-line drugs. Mongkol
na Songkla, Thailand's public health minister, said last week's
announcements of compulsory licensing were necessary to ensure broader
access to life-saving medicines for patients in Thailand's universal
health-care scheme. "We don't have enough money to buy safe and
necessary drugs," he said. He could've negotiated with the drug
companies first.

And there may be more to come. Teera Chakajnaradom, President of the
Pharmaceutical Research and Manufacturer's Association, the lobby for
Western industry in Thailand, announced last Monday that "Leading
members of the association have...confirmed that their plans for
further investment in Thailand will be put on hold....They are
concerned about continuing to invest in a country where the government
cannot provide a basic guarantee for the safety of their assets."

This is probably not just empty rhetoric. Thailand's move to issue a
compulsory license for a heart disease drug, Plavix, changes the debate
entirely. The Health Minister said cutting the price for Plavix from 70
baht ($2) to 6 baht per pill would increase use above the 20% of
patients needing the drug that he estimates currently have access. But
while this is understandable, it almost certainly breaks WTO rules.
Combating HIV has always been seen by activists, if not others, as a
health emergency, and under WTO rules, patents can be broken in
emergencies. However, it's hard for anyone to argue that heart disease
meets such stringent tests.

It wouldn't be surprising to see Sanofi-Aventis sue the Thai
government, or for the U.S. trade representative to file an action
against Thailand through the WTO's dispute resolution panel. Of course,
if negotiations with the Thai government fail, Sanofi and other drug
companies may just leave Thailand altogether.

This would be a disaster for Thailand because the real risk to the
poorest of the ill, and HIV sufferers in particular, is not drug prices
but bad health systems and poor training of medical professionals. For
self-interested reasons, Western pharma companies provide training in
the disease areas where they have drugs, which ensures proper
prescribing and good patient compliance, limiting the risks and costs
of treatment failure, which are far higher than the costs of the drugs
themselves.

If Thailand pursues ever wider compulsory licensing, the biggest risk
of all may be to the fragile but sustainable price tiering system that
Western drug companies follow globally. In Asia, patents are protected
and it is illegal for products to be re-imported from one country to
another. So it makes good economic sense for companies to tier their
pricing, charging lower prices to people who don't have the means to
pay what Europeans or Americans can.

So while a cancer drug or HIV treatment might cost $20 per person per
day in the West, companies often lower their prices in less affluent
markets, sometimes selling drugs at cost in poor countries. But they
can only do this if they can make money in mid-income countries, such
as those in Asia. If other countries follow Thailand's lead and demand
no-profit African pricing, then the incentives for further drug
development are weakened, especially for diseases uniquely affecting
the Asian region, such as dengue fever and leishmaniasis.

Other countries in the region are watching Thailand's actions with
interest; notably, India and China with their own pricing battles and
patent litigation imminent. And their copycat companies must be licking
their lips at the prospect of exporting WHO-approved, and arguably
WTO-compliant, but still ripped-off drugs to Thailand. The result of
the Thailand action could affect the direction of policy in Asia for
the next decade.

Hope remains that the Thai government will see sense. It still has not
actually broken the patent of Stocrin -- even though it issued a
compulsory license last fall, negotiations continue. One has to hope
that Bangkok reconsiders its strong-arm tactics. More than the health
of its people is at stake.

Mr. Bate is a resident fellow of the American Enterprise Institute.




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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