[Ip-health] IP-Watch: Thailand Presents Report On Compulsory Licensing Experience

[Mike Palmedo]

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Thailand Presents Report On Compulsory Licensing Experience

Tove Iren S. Gerhardsen
IP-Watch
March 12, 2007

A Thai official says the government's phones have started ringing a lot mor=
e
frequently since Thailand issued compulsory licenses to import and
eventually produce patented medicines, moving patent owners to drop their
prices. But sceptics maintained at a recent meeting that Thailand should
have talked to the companies before issuing such licenses.

Under a compulsory license, a government can itself produce - or authorise =
a
third party to do so - a subject matter that is still under patent without
the consent of the patent holder, or without having made efforts to obtain
authorisation from the right holder, under certain conditions such as it
being for non-commercial use, according to Article 31 of the World Trade
Organization (WTO) Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS).

According to the declaration on the TRIPS agreement and public health from
the 2001 Doha ministerial meeting in Qatar, each member is free to determin=
e
the grounds upon which such licenses are granted.

At the 8 March Geneva meeting, Suwit Wibulpolprasert, senior advisor on
health economics at the ministry of public health in Thailand, presented th=
e
report, "Facts and evidences on the 10 burning issues related to the
government use of patents on three patented essential drugs in Thailand,"
with the subtitle, "Document to support strengthening of social wisdom on
the issue of drug patent." Officials, industry, nongovernmental
organisations (NGOs) and others attended the meeting, which was organised b=
y
the NGO, Knowledge Ecology International.

The Thai government has issued the following three compulsory licenses over
the past months: On 26 January for the heart disease drug clopidogrel
(Sanofi-Aventis' Plavix) and the HIV/AIDS drug, lopinavir/ritonavir
(Abbott's Kaletra), and on 29 November 2006 for the HIV/AIDS medicine,
efavirenz (Merck Sharp & Dohme's Stocrin) (IPW, Public Health, 16 February
2007 and 22 December 2006).

Wibulpolprasert said that the government had indeed tried to talk to the
companies beforehand, some of whom had forgotten about it afterwards, and
that the pharmaceutical companies had only really come to the table after
Thailand issued the three compulsory licenses (CLs).

At the meeting, there was a general understanding that Thailand had acted
within the framework of the law, but that the licenses had still come as a
surprise, with some mentioning the license for the heart disease drug in
particular.

Eric Sayettat from the French mission to the WTO said that dialogue was
favoured and wondered whether the same results [price reductions] would not
have been achieved with prior discussion. He said compulsory licenses could
be likened to nuclear deterrent, which should seldom be used. This was
echoed by other developed-country officials.

Harvey Bale, director general of the International Federation of
Pharmaceutical Manufacturers and Associations (IFPMA), said that there was =
a
"serious perception gap" regarding the process, as there had not been a
serious discussion beforehand between the Thai government and the
pharmaceutical companies. He said that Merck had lowered its prices without
the threat of compulsory licences.

Wibulpolprasert said that this was not an issue of perception as the
evidence are there, referring to the report. He also said that prior
negotiations failed. But after the CL was issued, companies were calling th=
e
government, even beyond the three involved.

Wibulpolprasert said that for one of the drugs, the price for hospitals had
dropped from $1.35 per tablet to 60 cents, and another company had offered
the government a "buy-one-get-nine-for-free" deal. Merck had also made a
global price reduction on its medicine, he said, adding that the talks with
the companies after the CL announcements had been very constrictive.

Bale said that as it had taken about two years from the start of the proces=
s
until the government announced some of the CLs, new methods of production o=
r
economic changes could explain the price reductions. Wibulpolprasert said
that although that could be the case, it would be "very incidental."

Addressing the concern of some in the meeting, Wibulpolprasert said that at
the most, 15 percent of patented drugs in Thailand could become subject to
CLs, as there would have to be a strong social rational.

"It will not become a normal thing," he said. The government is just
"starting" to consider other drugs, he said, adding that companies can
"knock on our door any time." A special committee responsible for price
negotiation on patented drugs was just established via ministerial order
signed in February, he said.

The compulsory licenses will not affect the patented market as the medicine=
s
will be distributed to those unable to pay, including those already covered
by the government, he said. The cheaper drugs would not be exported, he
said, adding that Thai Law requires that every person is entitled to
essential drugs.

The White Paper

The report, or white paper, tells the story of the decision to issue the
licenses, which it called a "social movement =85 that aims at improving acc=
ess
to essential medicines and the health of the people." This movement needs
knowledge and evidence, social support and political commitment, it said.
The report is meant to answer questions and misunderstandings, such as why
there was no prior discussion and negotiation with the drug companies (one
of 10 "burning" issues), but also educate the public about medicines and
public health, it said.

The report compiles letters and communications from various parties involve=
d
in the situation. These include: Letters from the Thai government to the
companies; letters from a company before the CLs were issued on why prices
cannot be reduced, and after the CLs offering to reduce prices provided som=
e
conditions are met; letters between United States Trade Representative Susa=
n
Schwab and members of congress; a letter from the World Health Organization
(WHO) Director General Margaret Chan to the Thai government; and various
letters of support to the Thai government. The report also outlines
international as well as national law on the issue.

The report also contains a Merck press release from 14 February in which it
announces price reductions on Stocrin in "least-developed countries of the
world and those hardest hit by the epidemic." It said the price decrease is
"due to efficiencies resulting from improved manufacturing processes."

Sangeeta Shashikant of the Third World Network pointed out that CLs are
being used "very frequently" in developed countries, referring to examples
in the Thai report from the United States and Europe.

Brazilian official Guilherme Patriota said CL is a mechanism that is legal
and under TRIPS agreed in exchange for accepting the patenting of medicines=
,
which for many countries had been introduced with TRIPS. He said reactions
should therefore be more "matter of fact" and it was not acceptable that
countries issuing CLs were "marginalised." Referring to TRIPS, he said CLs
are a mechanism that was "part and parcel" of the system, and it is
therefore not a threat to the system, "because it is there."

Fernando Antezana Aran=EDbar of Bolivia, currently the chairman of the
Executive Board of the WHO, acknowledged Thailand's transparency, noting
that there was no requirement to publish a report on this, as well as its
"courage to do it [issue the CLs]."

David Vivas of International Centre for Trade and Sustainable Development
also acknowledged Thailand's effort to be transparent. He also suggested an
international study compiling the facts on health-related CLs. The industry
and others supported this idea.