Thailand Presents Report On Compulsory Licensing Experience

By Tove Iren S. Gerhardsen
A Thai official says the government’s phones have started ringing a lot more frequently since Thailand issued compulsory licenses to import and eventually produce patented medicines, moving patent owners to drop their prices. But sceptics maintained at a recent meeting that Thailand should have talked to the companies before issuing such licenses.

Under a compulsory license, a government can itself produce – or authorise a third party to do so – a subject matter that is still under patent without the consent of the patent holder, or without having made efforts to obtain authorisation from the right holder, under certain conditions such as it being for non-commercial use, according to Article 31 of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

According to the declaration on the TRIPS agreement and public health from the 2001 Doha ministerial meeting in Qatar, each member is free to determine the grounds upon which such licenses are granted.

At the 8 March Geneva meeting, Suwit Wibulpolprasert, senior advisor on health economics at the ministry of public health in Thailand, presented the report, “Facts and evidences on the 10 burning issues related to the government use of patents on three patented essential drugs in Thailand,” with the subtitle, “Document to support strengthening of social wisdom on the issue of drug patent.” Officials, industry, non-governmental organisations (NGOs) and others attended the meeting, which was organised by the NGO, Knowledge Ecology International.

The Thai government has issued the following three compulsory licenses over the past months: On 26 January for the heart disease drug clopidogrel (Sanofi-Aventis’ Plavix) and the HIV/AIDS drug, lopinavir/ritonavir (Abbott’s Kaletra), and on 29 November 2006 for the HIV/AIDS medicine, efavirenz (Merck Sharp & Dohme’s Stocrin) (IPW, Public Health, 16 February 2007 and 22 December 2006).

Wibulpolprasert said that the government had indeed tried to talk to the companies beforehand, some of whom had forgotten about it afterwards, and that the pharmaceutical companies had only really come to the table after Thailand issued the three compulsory licenses (CLs).

At the meeting, there was a general understanding that Thailand had acted within the framework of the law, but that the licenses had still come as a surprise, with some mentioning the license for the heart disease drug in particular.

Eric Sayettat from the French mission to the WTO said that dialogue was favoured and wondered whether the same results [price reductions] would not have been achieved with prior discussion. He said compulsory licenses could be likened to nuclear deterrent, which should seldom be used. This was echoed by other developed-country officials.

Harvey Bale, director general of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), said that there was a “serious perception gap” regarding the process, as there had not been a serious discussion beforehand between the Thai government and the pharmaceutical companies. He said that Merck had lowered its prices without the threat of compulsory licences.

Wibulpolprasert said that this was not an issue of perception as the evidence are there, referring to the report. He also said that prior negotiations failed. But after the CL was issued, companies were calling the government, even beyond the three involved.

Wibulpolprasert said that for one of the drugs, the price for hospitals had dropped from $1.35 per tablet to 60 cents, and another company had offered the government a “buy-one-get-nine-for-free” deal. Merck had also made a global price reduction on its medicine, he said, adding that the talks with the companies after the CL announcements had been very constrictive.

Bale said that as it had taken about two years from the start of the process until the government announced some of the CLs, new methods of production or economic changes could explain the price reductions. Wibulpolprasert said that although that could be the case, it would be “very incidental.”

Addressing the concern of some in the meeting, Wibulpolprasert said that at the most, 15 percent of patented drugs in Thailand could become subject to CLs, as there would have to be a strong social rational.

“It will not become a normal thing,” he said. The government is just “starting” to consider other drugs, he said, adding that companies can “knock on our door any time.” A special committee responsible for price negotiation on patented drugs was just established via ministerial order signed in February, he said. [Correction: In February this committee was given a mandate to carry on the work of an ad hoc working group for price negotiation on patented essential drugs set up in April 2005.]

The compulsory licenses will not affect the patented market as the medicines will be distributed to those unable to pay, including those already covered by the government, he said. The cheaper drugs would not be exported, he said, adding that Thai Law requires that every person is entitled to essential drugs.

The White Paper

The report, or white paper, tells the story of the decision to issue the licenses, which it called a “social movement … that aims at improving access to essential medicines and the health of the people.” This movement needs knowledge and evidence, social support and political commitment, it said. The report is meant to answer questions and misunderstandings, such as why there was no prior discussion and negotiation with the drug companies (one of 10 “burning” issues), but also educate the public about medicines and public health, it said.

The report compiles letters and communications from various parties involved in the situation. These include: Letters from the Thai government to the companies; letters from a company before the CLs were issued on why prices cannot be reduced, and after the CLs offering to reduce prices provided some conditions are met; letters between United States Trade Representative Susan Schwab and members of congress; a letter from the World Health Organization (WHO) Director General Margaret Chan to the Thai government; and various letters of support to the Thai government. The report also outlines international as well as national law on the issue.

The report also contains a Merck press release from 14 February in which it announces price reductions on Stocrin in “least-developed countries of the world and those hardest hit by the epidemic.” It said the price decrease is “due to efficiencies resulting from improved manufacturing processes.”

Sangeeta Shashikant of the Third World Network pointed out that CLs are being used “very frequently” in developed countries, referring to examples in the Thai report from the United States and Europe.

Brazilian official Guilherme Patriota said CL is a mechanism that is legal and under TRIPS agreed in exchange for accepting the patenting of medicines, which for many countries had been introduced with TRIPS. He said reactions should therefore be more “matter of fact” and it was not acceptable that countries issuing CLs were “marginalised.” Referring to TRIPS, he said CLs are a mechanism that was “part and parcel” of the system, and it is therefore not a threat to the system, “because it is there.”

Fernando Antezana Araníbar of Bolivia, currently the chairman of the Executive Board of the WHO, acknowledged Thailand’s transparency, noting that there was no requirement to publish a report on this, as well as its “courage to do it [issue the CLs].”

David Vivas of International Centre for Trade and Sustainable Development also acknowledged Thailand’s effort to be transparent. He also suggested an international study compiling the facts on health-related CLs. The industry and others supported this idea.

Tove Gerhardsen may be reached at tgerhardsen@ip-watch.ch.