[Ip-health] Asia Sentinel: Thailand’s cheap AIDS dr ugs under review: Despite threats, new government has good reasons to keep compuls ory licenses

[Sarah Rimmington]

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Thailand’s cheap AIDS drugs under review
Despite threats, new government has good reasons to keep compulsory licenses

February 25, 2008
Daniel Ten Kate


Vorsang, a 30-year-old AIDS patient who works at the Mercy Center in
Bangkok’s Klong Toey slum, sees the benefits of Thailand’s
groundbreaking decision to issue compulsory licenses for AIDS drugs
every day.

She makes routine house visits to abandoned mothers, their kids and
orphans who are infected with the virus. For them, the licenses removed
the daily stress of worrying about paying for AIDS drugs.

“If one person has AIDS, the whole family suffers,” she said. “To pay
for the drugs everyone must struggle and work very hard; it has a ripple
effect throughout the community.”

Compulsory copyright licenses are anathema to the world’s pharmaceutical
copyright holders because they are a unilateral exception that allows
another party to copy the copyrighted item without permission, although
the licensee must pay a fee. Last year Thailand issued such licenses for
two AIDS drugs, Merck’s Stocrin (efavirenz) and Abbott Laboratories’
Kaletra (lopinavir/ritonavir), and heart disease drug Plavix — all of
which are now offered for free in the government’s universal health care
scheme. The minister who imposed the compulsory licenses, Mongkol Na
Songkhla, was considering issuing more for three cancer drugs before he
was replaced in January after the People Power Party’s election win.

New Health Minister Chaiya Sasomsap now threatens to reverse those
policies, ordering a review of all compulsory licenses. He claimed that
the adverse impact “on pharmaceutical firms and big countries” would
“put Thailand in trouble.”

Those words must have pleased Big Pharma, which has worked tirelessly to
denigrate Thailand over the past year. But actually they hold little
water. Thailand appears ready to keep the current compulsory licenses in
place, even if they stop issuing any new ones.

Instead of looking to halt compulsory licenses, the new health minister
would be wise to come up with a comprehensive health plan and start
cleaning up the state-run Government Pharmaceutical Organization to
deflect legitimate criticisms from the pharmaceutical lobby.


CLs have strong support in Thailand

For one, a decision to withdraw compulsory licenses would be politically
unpopular. Two years ago, strict rules on compulsory licensing and drug
patents proved a key sticking point in a free-trade agreement between
Thailand and the US. At that time, Thaksin Shinawatra’s government
wouldn’t succumb to US demands on intellectual property rights out of
fear they would spark mass protests. This was done even though Thailand
wanted to remain a key exporter to the world’s largest economy.

Vorsang’s story and the thousands like it are a big reason for this.
Currently Vorsang takes efavirenz, a drug she wouldn’t be able to afford
without the compulsory license. Her two kids, who also have AIDS, take
Kaletra.

Vorsang receives efavirenz for free in the government’s universal health
care package. Her kids also receive Kaletra for free under a special Red
Cross program.

However, if Chaiya revokes the compulsory licenses, the government would
drop efavirenz from its health plan. Vorsang would then need to pay
1,400 baht (US$42.42*) per month because she has a work card through the
Mercy Center.

Vorsang’s kids — six-year-old Oat and seven-year-old Arm — will graduate
from the Red Cross program in two years. If Chaiya lifts the compulsory
license on Kaletra, Vorsang would need to come up with at least 10,000
baht a month for each child, or about 21,400 baht for her family’s drug
expenses each month — three to four times her monthly salary.

“With the CL, everything is free,” she says. “But without it I cannot
afford it.”

Vorsang and her kids are blessed, however, as the Mercy Center and other
aid groups like Medicins Sans Frontiere are working to give her and many
others the support she needs to buy the drugs if the compulsory licenses
are revoked. But the high costs mean some patients aren’t so fortunate.

“We try to help as many people as we can, but without the CLs we cannot
help everyone,” said Phongvicha, 40, another worker at the Mercy Centre
who has HIV.

“Before the CLs I had friends who stopped taking the medication because
they could not afford it. Now they are dead,” he said. “That wouldn’t
need to happen with the CLs.”


US political winds are shifting

Secondly, it’s highly unlikely that Thailand’s compulsory licenses would
lead to trade sanctions from the US. Due to timing more than anything,
the Generalized System of Preferences (GSP) privileges of certain Thai
products were revoked last year after the US downgraded Thailand to the
so-called “Priority Watch List” in its annual 301 report on countries
that abuse intellectual property rights. The poor wording of the report,
combined with trade representative’s reluctance to answer questions
about whether the move was a response to the compulsory licenses,
indicated that the administration of President George W. Bush was
tipping its hat to the pharmaceutical companies.

Even so, the Priority Watch List contains no mandatory trade sanctions,
and the GSP privileges were revoked because those products graduated
from the program according to a very specific formula. Now, with the 301
report again set to come out in April, some Thai business groups are
claiming the pharmaceutical lobby wants Thailand downgraded to its worst
possible rating, known as “Priority Foreign Countries.” This designation
also contains no automatic trade sanctions, but opens up Thailand for an
investigation that could lead to the loss of trade benefits.

This is highly unlikely. Currently no countries are on the list,
including China — by far the most egregious violator of intellectual
property rights. “Thailand practically has to be burning DVDs in the
basement of Government House to get on the Priority Foreign Country
list,” said a source familiar with the report. “The movie and
entertainment industries want to keep Thailand on the Priority Watch
List. Pharma is out there by themselves on this.”

Thirdly, US policy will likely change drastically when Bush leaves
office. During his tenure many saw the plethora of bilateral FTAs as
largely driven by the pharmaceutical industry’s attempts to lock in
countries to restrictions that go beyond the World Trade Organization’s
Agreement on Trade-Related Aspects of Intellectual Property, commonly
known as TRIPS. The pharmaceutical companies see TRIPS as too vague,
allowing countries like Thailand legally issue compulsory licenses under
the “government use” provision.

None of the three leading candidates to replace Bush are fans of Big
Pharma. The democratic challengers, Hillary Clinton and Barack Obama,
both favor universal health care and often rail against pharmaceutical
companies.

“Pharmaceutical companies are selling the exact same drugs in Europe and
Canada but charging Americans more than double the price,” says the
website of Obama, who is now leading Clinton in the race to be the
Democratic nominee. Obama would allow Americans to buy medicine from
other developed countries if they are safe, and he would repeal a law
that bans the government from negotiating with drug companies, which
could result in savings as high as $30 billion.

Hillary Clinton’s husband, former President Bill Clinton, has already
supported Thailand’s efforts and sought to reduce the price of AIDS
drugs in countries around the world. “No company will live or die
because of high price premiums for AIDS drugs in middle-income
countries, but patients may,” he said after Thailand took heat for its
compulsory licenses.

Even John McCain, the presumptive Republican nominee, has gone against
much of his party in fighting Big Pharma. He also wants the government
to negotiate drug prices with drug companies and import cheaper drugs
from Canada. As a candidate, he has called himself one of the “great
enemies of the pharmaceutical companies in Washington.”


GPO still short of WHO standards

Given this, it’s hard to imagine that Chaiya would upset America too
much if he kept the compulsory licenses in place.

Nonetheless, he could start pushing for a more comprehensive look at
health care in Thailand. This would include pushing for more spending on
public health and making the state-run Government Pharmaceutical
Organization (GPO) more transparent.

The GPO’s current factory does not meet World Health Organization
standards. After a delay of nearly five years, mostly due to alleged
corruption, the GPO has now started construction of a new factory that
does meet WHO requirements.

“We already got a contractor to build a new factory, and we expect it to
be finished within this year,” said Achara Eksaengsri, deputy director
of research and development at the GPO. “But we will need some more time
to order machines in the factory, and it should be operational next year.”
Despite this, the GPO plans to start producing generic versions of
patented drugs in a few months. This is a curious move, since last year
Mongkol said the GPO would not produce generic drugs in Thailand until
the new factory was completed.

By importing generic AIDS drugs from WHO-approved factories in India,
Thailand is eligible to use money from the Global Fund for Aids,
Tuberculosis and Malaria to pay for them. It would have to foot the bill
itself if it starts making them in the GPO, undermining claims that the
CLs would save money.

“The current GPO factory is not approved by the WHO, but it is approved
by the Thai Food and Drug Administration,” Achara said, disputing claims
that the drugs are below quality.

She claimed that local production is necessary for Thailand to manage
supply. But it’s hard to see why the country couldn’t wait another year
to start local production, particularly as it decided to urgently import
the drugs last year and still doesn’t have exact figures on demand.

The government claims that 30,000 patients need efavirenz, and it has
imported several batches of the drug already. Achara said the original
price was 1,200 baht per month per patient. Merck offered to lower the
price to 750 baht per month per patient, but the government opted to
import the drug from India for 650 baht.

For Kaletra, the government plans to import 4,000 bottles next month,
with each patient needing one bottle per month. About 1,000 patients now
need the drug, Achara said, although she expects that number to climb
once the drug is more readily available.

Kaletra originally cost about 10,000 baht per patient per month, she
said, but Abbott offered to lower the price to about 4,000 baht. The
government chose instead to issue the compulsory license and pay the
generic cost of about 2,000 baht.

For Plavix, the GPO plans to import two million tablets from India next
month. These will be disbursed through public hospitals, although the
government does not have precise figures on how many patients need the
drug because it was never offered before.

Plavix originally cost the government about 60 baht per pill, and patent
holder Sanofi Aventis offered to lower the price to 20 baht after the
government threatened a compulsory license. But the government rejected
the offer and issued a compulsory license, allowing it to buy the drug
for two baht a pill.

Achara knows the GPO will become a target for Big Pharma, but she
insisted that it wants to make the drugs only to control supply. It will
not profit from them, she said.

“We cannot make a profit because we know that if we have multinational
corporations sue us, we will have to go to court and disclose all our
accounts,” she said.

In addition, she said, it’s impossible to quantify the dollars saved by
the compulsory license policy, as without it the government wouldn’t
even consider buying expensive drugs.

“If the drug prices are too high, then nobody in the government would
support buying them anyway,” she said. “The result is that the patients
would have nothing.”

*Correction. The amount was misstated originally.

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