[Ip-health] Op-ed in IL newspaper: Thailand's misuse of 'compulsory licensing' allowed corrupt officials to steal millions

[Mike Palmedo]

Thailand's misuse of 'compulsory licensing' allowed corrupt officials to
steal millions

Sally Pipes, Pacific Research Institute
Bellview News-Democrat
March 24, 2008

SAN FRANCISCO -- When it comes to public health, Thailand's former
government leaders would like the world to think that they're a
collection of 21st-century Robin Hoods.

Last year, the unelected military-backed government gave Thailand's
state-run pharmaceutical firm, the Government Pharmaceutical
Organization (GPO), permission to manufacture generic versions of drugs
that fight heart disease and AIDS, even though the medicines were still
patented by Western firms.

Robbing the rich to give to the poor, right?

Not really. Sick Thai citizens have yet to see any benefits and the move
has set a dangerous precedent that will stifle medical innovation and
endanger the health of millions.

Thai officials broke the patents by using "compulsory licenses," a legal
maneuver afforded to poor countries by the World Trade Organization
(WTO) in the event of a public health crisis. If a local government
can't afford a pertinent patented drug, it can issue a compulsory
license to produce it before the patent has expired.

But these provisions were never intended to be used by countries that
could afford the medicines but are simply choosing to pay less in order
to make other purchases - like tanks for example.

Last year, for instance, Bangkok spent $9 million on pay raises for
military leaders. Since 2006, the nation has increased its defense
budget by over 30 percent.

The reality is that the former military government officials used
compulsory licenses to pursue their own economic development. Their
scheme is just protectionism by a different name - and world governments
and trade bodies should see it for what it is.

Giving the GPO permission to manufacture patented drugs is part of the
Thai government's plan to establish itself as a globally competitive
producer of generics. Of course, there is nothing wrong with the
government wanting to encourage its own industry - but not when that's
done at the expense of patients and other countries who abide by both
the letter and the spirit of the law.

So far, the gambit has proven quite lucrative. In 2005, Thailand's GPO
reaped $35 million in profits by copying medicines. Only 2 percent of
that went toward research and development.

The literally billions of dollars in free medicines and development
projects pouring into sub-Saharan Africa don't come for free. Those must
be funded by sales from the developed world and, at least in part, from
countries like Thailand that can afford to pay some small part of the
cost of innovation - even if not at the same scale countries in the U.S.
and Europe can afford.

Activists justify compulsory licenses by claiming that drug makers focus
on diseases affecting only rich countries.

But that's simply not true. Over 100 drug-development projects that
specifically target diseases plaguing the Third World are currently
underway. Western pharmaceutical firms have already devised life-saving
treatments for HIV/AIDS, tuberculosis, and malaria. And they often offer
patented drugs to poor countries for free or at a steep discount.

In fact, even in Thailand, the affected companies were all offering
their products at steep discounts to the Thai government. When one looks
at the potential savings to the Thai government between those prices and
potential generic prices the distinctions are insignificant to a
national budget - less than the price of one tank.

Compulsory licenses can have a use in rare instances. But using them as
a deceptive tool for building up one's own industry perverts the spirit
of the trade agreement and will ultimately prove harmful to patients.

The newly elected Thai government is wisely examining this issue and
appears more interested in pursuing a thoughtful, long-term policy of
economic development that will serve its citizens far better than
quick-fix political schemes that result in Thailand becoming a hero to
anti-capitalist activists, but a pariah to the world economic community.

Sally C. Pipes is president & CEO of the Pacific Research Institute,
(www.pacificresearch.org), a nonprofit, nonpartisan think-tank that
champions free market policy solutions.

--
Mike Palmedo
Research Coordinator
Program on Information Justice and Intellectual Property
American University, Washington College of Law
4910 Massachutsetts Ave., NW Washington, DC 20016
T - 202-274-4442 | F 202-274-0659
mpalmedo@wcl.american.edu