[Ip-health] AEI mag: Thailand’s Drug Wars: The military junta abused intellectual property r ights and harmed trade relations. What wi ll the new government do?

[Sarah Rimmington]

FYI, a magazine published by the U.S. neo-con think tank American
Enterprise Institute (AEI) put a story about Thailand's medicine policy
its current front page feature story.  The slant of the story is
predictable.

http://www.american.com/archive/2008/march-02-08/thailand2019s-drug-wars
Thailand’s Drug Wars
Published in The American (magazine)
By Roger Bate Wednesday, March 12, 2008


The military junta abused intellectual property rights and harmed trade
relations. What will the new government do?

The return of democracy to Thailand has not been universally welcomed.
Some Thais are disgruntled by the resurgent influence of their allegedly
corrupt former prime minister, Thaksin Shinawatra. Others, including
foreign NGOs such as Doctors Without Borders and Oxfam, are mourning the
demise of the military junta because it issued compulsory licenses for
the production of cheap replica versions of branded drugs used to treat
HIV, heart disease, and cancer. Although the replica drugs were of
dubious quality, they offered the junta enticing possibilities for graft
and were popular with local media and foreign NGOs. They also boosted
Thailand’s international reputation in some quarters: Brazil explicitly
mentioned Thailand when it issued its compulsory licenses on HIV drugs
last year, and Indonesia, the Philippines, and India may do likewise in
the coming months.

When the new Thai health minister, Chaiya Sasomsup, announced that he
would review the compulsory licenses for cancer drugs, he was bombarded
with protests. Activists at his office in Bangkok forced him to host
some meetings offsite. Meanwhile, members of Act-Up, an AIDS activist
organization, protested outside the Thai embassy in Paris, and myriad
groups urged Chaiya not to review the drug licenses.

They have a point, since the World Trade Organization allows for
governments to break a patent after “efforts to obtain authorization
from the right holder on reasonable commercial terms and conditions”
have failed, or in cases of “national emergency.”

It appears doubtful that the Thai government fulfilled the first
requirement. Under threat of compulsory licenses, manufacturers in
previous price negotiations with Thailand all offered substantial price
reductions. One company, Novartis, eventually won a reprieve after
agreeing to supply Glivec, a leukemia medicine, to 900 patients free of
charge under its philanthropy program. But offers made by other
companies (such as Sanofi-Aventis, Abbott Laboratories, and Merck) were
all rejected, as the Thai government instead chose to contract with
Indian manufacturers making replica products.

    The Thai junta spent a pitifully small amount on healthcare: 3.3
percent of GDP. In 2004, two of Thailand’s poorer neighbors, Cambodia
and Vietnam, spent 6.7 percent and 5.4 percent of GDP, respectively.

The issue of a “national emergency” is more problematic. Thailand has
assumed (correctly, so far) that it would be given the benefit of the
doubt: a sovereign government should be allowed to determine when such
an emergency situation exists. But if there is indeed a health
emergency, the Thai government has failed its people miserably. The
military regime justified its compulsory licensing as necessary to
defend Thailand’s universal healthcare program, which covers 48 million
of Thailand’s 64 million people. Lower drug prices would help any
healthcare program, but the Thai junta spent a pitifully small amount on
health: 3.3 percent of GDP, less even than the Thaksin administration,
which spent 3.5 percent in 2004. By comparison, two of Thailand’s poorer
neighbors, Cambodia and Vietnam, spent 6.7 percent and 5.4 percent of
GDP, respectively, in 2004. Thailand was even outspent by poor African
countries such as Botswana and Senegal.

The junta’s desire to produce drugs domestically at Thailand’s
state-owned Government Pharmaceutical Organization (GPO) may even have
proved financially harmful. The Asia Sentinel, a Thai newspaper, has
observed that, “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.” But if the
GPO were to make them, “it would have to foot the bill itself.” As it
is, we do not know precisely what the GPO has made and supplied—one
hopes not very much—since the GPO cannot manufacture drugs that comply
with World Health Organization standards, and it facilities will not be
upgraded for at least another year.

To its credit, Thailand’s recently elected government seems to be
reassessing the costs and benefits of patent breaking. The new Thai
labor minister told The Bangkok Post last week that relatively little
money was saved by issuing compulsory licenses on HIV medicines. And
because Thailand’s HIV-prevention program has been so successful—new
infections are now running at 6,500, down from nearly 21,000 in 2005—the
problem of providing drugs is becoming less acute.

By issuing compulsory licenses so frivolously, Thailand has sabotaged
its trade relations with Europe and the United States. It currently
appears on the U.S. Trade Representative’s (USTR’s) “Priority Watch
List” of countries that have abused intellectual property rights, and it
has been stripped of certain trade privileges. When the USTR’s Annual
301 Report on intellectual property comes out in April, Thailand could
be demoted even further and named as a “Priority Foreign Country,” which
would bring more adverse trade consequences.

There are worrying aspects to the new government: for example, the new
head of Thailand’s Food and Drug Administration resigned on Monday due
to corruption allegations. Until this week, it looked as though the new
regime would not enforce the existing compulsory licenses. But now it is
sending mixed signals. On Tuesday, the health minister said that
Thailand may actually enforce the compulsory licenses for certain cancer
drugs.

Hopefully Thailand’s patent fight will increase global awareness of the
problem. Western pharmaceutical companies need to tier prices for all
drugs, not just high-profile ones. Meanwhile, Asian governments must
push for fair—not extortionately low—drug prices and ensure that the
lower-priced products their citizens receive from Western companies are
not resold in wealthier markets, which would undermine the tiered
pricing system.

Roger Bate is a resident fellow at the American Enterprise Institute.

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