The Military Government issues more compulsory licenses

On 25th January 2007, Thailand’s military government stunned the pharmaceutical industry by their decision to issue more compulsory licenses with respect to drugs for treatment of heart diseases and AIDS. Earlier, in November last year, Thailand had issued its first compulsory license for making Efavirenz, an anti-retroviral drug manufactured by US pharmaceutical company Merck & Co Inc.

Thailand’s Ministry of Public Health confirmed that it had issued compulsory license for Kaletra, a drug used to combat AIDS. Kaletra is produced by US-based Abbott Laboratories. The other drug under compulsory license is an anti-clotting agent for heart patients. This drug, Plavix is sold by Sanofi-Aventis and Bristol-Mayers Squibb. Plavix is Bristol-Myers Squibb’s biggest-selling product with annual sales of US$6 billion.

“We have to do this because we have so many patients to treat with so little budget. We can’t watch our people die and their patents have been here for so long,” said Mongkol na Songkhla, who became Health Minister after the September 19 military coup. He cited the ballooning costs of treatment as one of the reasons for the move. Thailand currently has about 500,000 people living with HIV and an enormous number of patients with cardiovascular diseases. “The universal healthcare scheme that took care of about 48 million Thais including the AIDS patients had an insufficient budget to ensure treatment for all”, said Mongkol. The Health Minister appears to have brushed aside the pharmaceuticals industry’s plea and accused the industry of making excessive profits. “They are reaping colossal benefits from us,” he said, “Instead, Thailand would buy copycat versions of the drugs from companies in China or India for as little as 10 percent of their original price” 1.

The agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) allows issuance of compulsory licenses to produce essential medicines to treat life-threatening diseases. A government is allowed to declare a “national emergency” and license the production or sale of a patented drug without the permission of foreign patent owner.

The issuance of first compulsory license drew a swift riposte from U.S. drug maker and patent holder Merck & Co Inc. The second instance of compulsory licensing is attracting much severe criticism. Drug companies reacted angrily to the event, saying they had been kept in the dark, and urged the Health Ministry to reconsider a decision, they said could lead to many firms leaving the country. The International Pharmaceutical community has urged the Thai government to “talk and not to issue compulsory licenses”. Dr. Harvey Bale, Director-General of the International Federation of Pharmaceutical Manufacturers and Associations, said that “when a country is grappling with severely-limited resources, the long-term interest of patients will be best served by the government initiating direct discussions with the companies that invent, develop and market innovative medicines to directly address key health challenges.”2

“No company has received any contact,” said Teera Chakajnorodom, President of the Pharmaceutical Research and Manufacturers Association (PReMA), an industry umbrella group. “It has stunned our industry.” As the news surfaced PreMA added, “Leading members of the association have confirmed that their plans for further investment in Thailand will be put on hold pending a review of the foreign investment climate.” The association further mentioned, “we fully understand the health challenge and financial constraints that the Ministry of Public Health faces. However, the best response to this situation is to engage constructively with industry to find mutually agreeable solution”3.

The widening of compulsory licensing is another blow to foreign investors still recovering from capital controls imposed in December to prevent depreciation of its currency and a proposed tightening of laws governing overseas firms in Thailand. “It’s very, very worrying when companies’ intellectual property rights are not supported within a country,” said Judy Benn, executive director of the American Chamber of Commerce in Thailand.

By contrast, AIDS activists applauded Bangkok for taking a bold stance. Paul Cawthorne, head of Medecins Sans Frontieres (Doctors Without Borders) in Thailand, said the government was spending 11,580 baht ($330) per patient per month for Kaletra and could cut that bill by two thirds if it switched to a generic manufacturer.3

Several media sources say the Ministry is considering issuance of compulsory licenses for six more drugs – four cancer drugs and two antibiotics.

Sources: Reuters, Pharmaceutical Times and Strait Times