[Ip-health] Thailand's Drug-Company Stare-Down Faces an Uncertain Future

[Sarah Rimmington]

http://asiasentinel.com/index.php?option=3Dcom_content&task=3Dview&id=3D897=
&Itemid=3D31

Thailand=92s Drug-Company Stare-Down Faces an Uncertain Future

23 November 2007
by Daniel Ten Kate
The Asia Sentinel
The bold Thai health minister who rattled big pharma will step aside
after next month=92s election



A year ago, Thailand sent shockwaves around the pharmaceutical world
when it announced it would issue a compulsory license for the patented
AIDS drug Efavirenz.

Major drug companies cried foul, pouring criticism on the country for
allegedly stealing intellectual property. Patients would suffer, they
claimed, as drug companies would no longer have the incentive to produce
life-saving drugs.

Many institutions, like the World Health Organization, didn=92t know what
to think. Margaret Chan, the WHO director-general, initially scolded
Thailand and called the policy =93na=EFve.=94 She quickly made a u-turn,
writing Thai Health Minister Mongkol Na Songkhla to apologize and tell
him that the WHO =93unequivocally=94 supports compulsory licenses, and that
Thailand=92s use of them was =93fully in line with the [World Trade
Organization=92s] TRIPS agreement.=94

A year later, the results of the policy speak for themselves. Merck
immediately cut the price of first-line anti-retroviral Efavirenz from
1,400 baht per bottle to 767 baht per bottle in Thailand, and slashed
prices for other developing countries as well. Abbott Laboratories cut
the price of second-line drugs Kaletra and Aluvia, a heat-stable form of
the drug that does not require refrigeration, to $1,000 per month from
$2,200 per month for 45 lower and middle-income countries.

=93The compulsory licenses have been an incredible success,=94 said Paul
Cawthorne, the head of mission for Medecins Sans Frontieres in Bangkok.
=93What=92s really surprising is that after Thailand issued the CLs, Merck
and Abbott reduced prices significantly for not just Thailand, but many
countries.=94

Merck and Abbott have not seen financial ruin so far. Abbott earned $2.4
billion in the first nine months of the year, already topping full-year
2006 earnings of $1.7 billion. Merck has seen net income rise 24%
year-on-year to $4.9 billion in the first nine months, ahead of
analysts=92 expectations.

But while Merck extended the offer for reduced Efavirenz prices to
Thailand, Abbott went the opposite way and gave the discounted offer to
every middle-income country except Thailand - an apparent punishment for
daring to take advantage of rights granted to it under TRIPS, the only
international treaty that discusses the topic. The Chicago-based company
also withdrew registration for Aluvia, forcing Thailand=92s Government
Pharmaceutical Organization (GPO) to spend six months conducting tests
to re-register a generic form of the drug with the country=92s Food and
Drug Administration.

That process is now complete, said Achara Akesangsri, the GPO=92s deputy
chief of research and development. The state-owned drug company, which
has come under fire for corruption in the past, plans to import the
first batch of generic Aluvia next month from the Indian firm, Matrix
Laboratories.

In the meantime, she said, the GPO is collaborating with Indian generic
drug-maker Hetero Drugs to build a new plant in Thailand that meets WHO
standards. Earlier this year, health minister Mongkol sacked the former
head of the GPO, who let the process for building the factory drag on
for more than three years as allegations of corruption mounted.

Achara said Dr Witit Artavakun, the GPO=92s new managing director, is
operating more efficiently. =93The GPO is much improved from last year,=94
she said. =93Everything is moving faster.=94

Even though Mongkol=92s term will end after Thailand finally holds a
general election on December 23, he is not slowing down. The minister,
who has already issued a compulsory license for popular heart drug
Plavix in addition to the two anti-retroviral drugs, has threatened to
issue compulsory licenses for cancer-fighting drugs unless prices are
slashed. The minister said Novartis has offered to provide the drug
Imatinib for free if Thailand backs off efforts to produce more generics.

But Mongkol is not just sticking it to foreign drug companies. He has
also proposed regulations that would break the GPO=92s monopoly on selling
drugs to local hospitals - raising the ire of the state enterprise=92s unio=
n.

=93The GPO must develop its capacity to compete with the private sector,
and I expect the price of drugs to decrease,=94 he said earlier this
month, according to local media reports.

Pharmaceutical companies both outside and inside Thailand may welcome
the end of Mongkol=92s reign atop Thailand=92s health ministry, but AIDS
groups will miss him. In a strange set of circumstances, the coup that
toppled former Prime Minister Thaksin Shinawatra allowed Mongkol, a
doctor and career bureaucrat, to take a position normally reserved for
politicians.

=93Mongkol was under huge pressure from industry and from other ministers
to stop his efforts,=94 Cawthorne said. =93But the guy was determined. He
knew where he wanted to go and what he wanted to achieve. It was a very
fortunate set of circumstances.=94

So what happens next? Will Thailand=92s elected leaders follow the policy
set by the non-elected government?

Most analysts doubt that any party will reverse what Mongkol achieved
over the past year, but they also doubt that the next minister will be
as aggressive. Thawat Suntrajarn, director-general of the Disease
Control Department, said: =93The next government should follow this policy
and not turn it back. It=92s useful for all the patients. I=92m sure it wil=
l
continue.=94

Thaksin resisted issuing compulsory licenses because he was intent on
signing a free-trade deal with the US. But provisions related to
compulsory licenses, data exclusivity and patents proved a key sticking
point in the negotiations, which stalled indefinitely after the coup.

The Democrats, the main opposition under Thaksin and one that could worm
its way into a coalition, have said they support compulsory licenses for
essential drugs. The front-running People=92s Power Party, comprised of
former Thaksin loyalists, has repeated the same thing. Other parties
hedge on the issue, saying that it depends on the circumstances during
the next administration.

=93Foreign pharmaceutical companies have no votes in the election, so
parties have no incentive to come out on their side,=94 said a Western
diplomat who follows the issue closely.

=93I went and saw [Democrat leader] Abhisit [Vejjajiva] speak to a
business forum in which he said the party would seek better ways to
improve access to medicine besides CLs, and a week later he talked to
public health NGOs and said the opposite,=94 the diplomat added. =93My gues=
s
is they are pandering to both audiences, and then whatever parties get
in will keep the current CLs and quietly let the issue go away. For this
government, the issue was mostly personality-driven; there wasn=92t anyone
else who necessarily cared.=94

Cawthorne and other HIV/AIDS activists are hoping that=92s not the case,
although they realize the great amount of pressure that will face
Thailand=92s next health minister.

=93My guess is there will be lots of lobbying from both sides,=94 he said.
=93We=92ll just keep our fingers crossed.=94



--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: (202) 387-8030
Cell: (202) 422-2687
www.essentialaction.org/access/