[Ip-health] USTR Not Preparing Case Against Thailand For Compulsory Licenses

[Sarah Rimmington]

Inside US Trade

USTR Not Preparing Case Against Thailand For Compulsory Licenses

_______________________________________________

Date: February 29, 2008

The Office of the U.S. Trade Representative (USTR) late last week moved
to quell rumors that it was on the verge of filing a World Trade
Organization case as the new Thai government reviews whether to proceed
with implementing compulsory licenses for three cancer drugs that had
been invoked by the previous government.

=93Speculation about a WTO case is frankly surprising,=94 according to USTR=
.
=93Any such consideration would only happen after a thorough review of the
consistency of such measures with WTO rules and extensive discussion
with the Thai government, neither of which has happened.=94

Fears of an imminent case had been expressed by activist groups, largely
based on Thai press reports that the U.S. had threatened such action as
the Thai government reviewed whether it would seek production of the
three cancer drugs under a compulsory license arrangement.

Activist groups such as Essential Action, Knowledge Ecology
International and Oxfam urged the Thai government in a Feb. 20 letter
not to back away from implementing the compulsory licenses for the three
cancer drugs. They stated that any threat of trade sanctions are not
grounded in legal reality, and that all compulsory licenses issued were
done in full compliance with the Trade Related Aspects of Intellectual
Property Rights (TRIPS) Agreement.

TRIPS allows countries to invoke compulsory licenses without a
reasonable period of time of negotiations with the patent holder in
cases of national emergencies or for public, non-commercial use.

NGO sources were unclear on the nature and timeline for the Thai review,
but Robert Weissman, director of Essential Action, said it will likely
be completed within a month after the Thai cabinet examines the issue.
They charged that the government review was likely done in response to
pressures from the U.S. government and U.S. pharmaceutical companies.

They also pointed out that the new Thai government will likely be more
sympathetic to Western nations on trade issues than the previous
government, which was put in place after a military coup in September 2006.

The reports of a potential WTO case emerged at a time when the
Biotechnology Industry Organization (BIO) and the Pharmaceutical
Research and Manufacturers of America (PhRMA) petitioned the U.S.
government, as part of the annual Section 301 process on intellectual
property rights, for Thailand to be designated a Priority Foreign Country.

As a Priority Foreign Country, Thailand would be the target of an
internal U.S. investigation assessing whether it is violating a trade
agreement or imposes an unreasonable or discriminatory measure or
burdens or restricts U.S. commerce. During the investigation, the U.S.
would negotiate with Thailand to get it to change its policies or decide
on appropriate action if it fails to do so.

In case USTR found such a violation, it would be forced to take action
against the country unless certain exceptions applied, such as a finding
that retaliation could cause serious harm to U.S. national security.
Retaliation could not take the form of unilateral action to take away
WTO benefits. But the U.S. could take action to revoke trade preferences
the U.S. extends unilaterally, or it could pursue a challenge in the
WTO. The initial investigation period under the Section 301 law is six
months, which can be extended.

USTR designated no Priority Foreign Countries under the Section 301
proceedings last year, but instead opted for placing countries on
various watch lists that are set up as a matter of USTR practice, not in
the Section 301 law.

USTR Susan Schwab last year carefully avoided charging that Thailand is
violating its WTO obligations in letters discussing the compulsory
licensing issue. She has generally stated USTR respects the Thai
government=92s right to issue compulsory licenses according to its own
laws and its obligations under the WTO (Inside U.S. Trade, May 29).

The previous Thai government invoked compulsory licenses for the three
cancer drugs along with two other HIV/AIDS drugs and one blood thinner.
One of the HIV drugs was Efavirenz, which is produced by Merck & Co, and
for which Brazil has also issued a compulsory license (Inside U.S.
Trade, April 27).

PhRMA and BIO complained about Thailand for invoking compulsory
licenses, BIO particularly for the blood thinner and the cancer drugs.
BIO alleged in its comments that the compulsory licenses invoked by
Thailand =93go well beyond the letter and spirit of the Doha Declaration
provisions relating to health emergencies ... the medical management of
such non-communicable diseases may be complex and costly, but it does
not rise to the level of a public health emergency.=94

PhRMA implied that Thailand does not meet all thresholds under TRIPS.
=93In no instance has Thailand cited a national emergency, nor a situation
of extreme urgency, as its justification,=94 it said.

Sources in favor of compulsory licenses pointed out that this argument
has little bearing, as Thailand did not use national emergency as
grounds to invoke the license but used the public, non-commercial use
grounds for doing so.

PhRMA also said if the newly elected government should =93reverse its
policy with regard to compulsory licensing, and continue collaborative
dialog with industry ... we would encourage the U.S. government to
revisit=94 Thailand=92s status and make it a Priority Foreign Country under
Section 301.

Under TRIPS Article 31(b), a compulsory license may be issued without a
=93reasonable period of time=94 of negotiations with the patent holder in
cases of =93national emergency or other circumstances of extreme urgency,=
=94
as well as public non-commercial use.

Further, the 2001 Doha Ministerial Declaration on the TRIPS Agreement
and Public Health states that each member has the right to determine
what constitutes a national or extreme emergency, including public
health crises related to HIV/AIDS.

The 2003 WTO Decision on TRIPS and Public Health gave countries a
temporary waiver from the obligation of Article 31(f), that compulsory
licenses must be granted mainly to supply the domestic market. The
effect of this waiver was to open up new access to cheaper drugs for
countries that lack production capacity and would like to import generic
copies made under compulsory licenses from third countries under certain
conditions.

Technically, this works by having the country that makes the drug for
export invoke a separate compulsory license with certain conditions.

In this case, Thailand does not need to use the 2003 waiver for the
three drugs in production under compulsory licenses, because the country
producing them is India and the drugs were patented before 2005. Under
TRIPS, India and other developing countries were exempt from protecting
drugs with patents up to 2005, and this means the drugs are not under
patent there. Therefore, no second compulsory license is needed for
India to produce them for Thailand, according to NGO sources.

Thailand=92s Ministry of Public Health issued a paper earlier this month
explaining a step toward issuing notifications for compulsory licenses
of the three cancer drugs. It maintained that it gave sufficient time
for negotiations with patent holders, starting in mid-October of 2007,
but that these were ultimately not successful as they would still hinder
=93universal access=94 to the medicines with an undue financial burden. The
demands of the pharmaceutical companies would also create administrative
burdens, the paper said.

The International Intellectual Property Alliance (IIPA) in its Feb. 11
comments said Thailand should remain on the Priority Watch List for
copyright violations. IIPA said USTR should do =93an out of-cycle review=94
on the country to determine whether it makes sufficient progress in the
next year on issues such as curbing optical disc piracy.


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