[Ip-health] Sally Pipes: Thailand's Misuse of 'Compulsory Licenses'

[B.Baker@neu.edu]

Dear Editor

Sally Pipes' article "Thailand's misuse of 'compulsory licensing' allowed
corrupt officials to steal millions" not only has a completely dishonest
headline, it is also full of misinformation and disinformation about the
lawfulness and propriety of issuing compulsory licenses.

First of all, the headline suggests "corruption," but nowhere in the
article is there any evidence of misappropriation of funds by any Thai
officials.  There has been an increase in military budgets and a pay
increase for military leaders, but there's no suggestion that this money
was somehow diverted illegally from government coffers.  At this point in
history, it is at least a little odd for the American Pipes to be
complaining about increased military spending in Thailand, which spends
less on the military in a year than the U.S. does in two days.

Second, Pipes claims that compulsory licenses were never intended for
countries like Thailand that can afford medicines.  There is nothing in the
text of the WHO TRIPS Agreement stating such a limitation.  Moreover, how
does Ms. Pipes explain that the U.S. is the country with the highest rate
of government use licenses in world or that Abbott Laboratories, one of the
alleged "victims" of compulsory licensing in Thailand, has just recently
benefited from a U.S. court-ordered compulsory license on Innogenetics's
patents for its hepatitis C virus (HCV) testing kit?

Third, Pipes claims that Thais have not received any benefits from the
compulsory licenses.  How does she deny the health benefits of increased
access to medicines for 16,000 Thais living with HIV who are newly
receiving generic efavirenz as of January 2008 or for 1,600 patients newly
receiving a generic, heat stable form of lopinavir/ritonavir, the
life-saving medicine withdrawn from the Thai market by Abbott?

Fourth, Pipes claims that Thailand is somehow cheating because it has
licensed the Government Pharmaceutical Organization, a state-owned drug
company, to manufacture the generic drugs and that this company made $35
million in profit in 2005 by copying medicines.  There is nothing in TRIPS
that restricts government-owned entities from receiving compulsory licenses
and there is nothing preventing licensees from making a profit.  But at
this point, Pipes claim is misleading in three other ways:  in 2005, the
GPO was only and legally producing generics that were not patented in
Thailand; currently, the GPO is actually importing medicines from India
under the compulsory licenses rather than producing them on its own; the
GPO is investing its profits, as many companies do, to build a new plant to
meet global standards for good quality production.

Fifth, Pipes claims that the cost savings are insignificant - the cost of
one tank.  How does she explain the World Bank report that finds that
Thailand will save $3.2 billion dollars on second-line antiretroviral alone
over a 20 year period by issuing compulsory licenses?

Sixth, Pipes claims that it is somehow unfair to promote local industry
when in fact the U.S. uses trade threats and sanctions to protect its own
IP-based industries and where TRIPS promises, but has failed to deliver,
technology transfer to developing countries.

Finally, what Pipes doesn't explain is that rich Western drug giants want
absolute freedom to set high prices for sales to middle- and upper-class
elites in low- and middle-income countries like Thailand, even if that
means 90% of the population must go without.  Ironically, Thailand left the
rich, private sector market to the drug companies by issuing compulsory
licenses for only for public sector distribution.

Pipes "market-policy solutions" may be good for monopolists but they are
bad for poor people needing access to essential life-saving medicines in
developing countries.  All of Africa and Asia markets combined (excluding
Japan) comprise only 5.1% of the global pharmaceutical market.  Obviously,
these small and poor markets are not what drives or funds the global
research and development agenda.

There may be an honest argument that Thailand should pay a higher royalty
rate on its compulsory licenses or that countries should figure out better
incentives for needed research and development into neglected diseases, but
the tired and misleading commentaries of drug company apologists simply get
in the way of true progress on daunting problems of more focused and
therapeutically beneficial innovation and greater access to medicines.

Professor Brook K. Baker, Health GAP
Northeastern U. School of Law
Program on Human Rights and the Global Economy
400 Huntington Ave.
Boston, MA 02115
617-373-3217 (office)
617-259-0760 (cell)