Wall Street Journal - February 9, 2007

The Thai Ministry of Public Health announced last week that it would issue a "compulsory license" for Abbott Laboratories' Kaletra, an HIV/AIDs drug, and Clopidogrel, the local Thai brand of Sanofi-Aventis's Plavix heart medication -- meaning that Thailand will eventually produce generic copies of these drugs. Its decision follows a similar move in November, when it issued a compulsory license for Merck's Stocrin, a retroviral HIV/AIDs drug. In a statement, the Ministry said WTO rules give Thailand "a right to issue a safeguard measure to protect public health, especially for universal access to essential medicines using compulsory licensing on the patent of pharmaceutical products."

That's true -- and Thailand's actions are technically legal. The WTO language on compulsory licensing, contained in the Agreement of Trade-Related Aspects of Intellectual Property Rights, or TRIPs, is regrettably vague. It doesn't list specific reasons why government can seize private patents. The only hint of protection of private property lands in Article 31, which says "the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions."

Since Thailand did not bother to consult prior to issuing the compulsory licenses -- the drug companies woke up to read about it in the papers -- it clearly breached the spirit, if not the letter, of Article 31. In any case, it's hard to argue that Thailand has an AIDs epidemic, when its incidence is a little over 1% -- and countries such as South Africa are well over 20%. The same goes for heart disease.

Until now, governments have been careful to define disease outbreaks as "emergencies," primarily because they didn't want to dissuade drug companies from investing in their countries. Hong Kong, for example, refrained from issuing a compulsory license during the 2001 SARS outbreak. Drug companies spend billions of dollars in research, development, training and distribution. Without market-based incentives, there's little reason to invest in R&D. And governments don't have the knowledge or wherewithal to step in.

It's also worth noting that Thailand's actions are a boon for the Government Pharmaceutical Organization, the state-owned pharmaceutical monopoly. Until it can ramp up its own production, GPO will be the sole importer and re-seller of the products Bangkok seized.

GPO says it will be able to charge consumers lower prices. But Merck, for instance, was already selling Stocrin at cost in Thailand, just as it does in other developing countries with over 1% incidence of HIV/AIDs. GPO's profits, then, must come from sourcing a cheaper producer of generics. It's likely to turn to India -- the world's most prolific source of counterfeit generics. How this is good for Thai patients is anyone's guess.

There are other, more serious reasons to be concerned for Thai patients. As Roger Bate from the American Enterprise Institute explains nearby, GPO's production facilities have never met WHO standards. HIV drug resistance in Thailand is high, most likely because of the reliance on faulty GPO generic copies. Now, given the lack of IP protection, foreign pharma companies may hesitant to introduce newer, more expensive and sophisticated second- and third-generation drugs into Thailand. Merck will soon announce the result of a major clinical trial for an AIDs vaccine. If approved, it's likely the drug -- and others like it -- won't debut in Thailand.

Thailand's decision is already reverberating world-wide. Brazil, which has used the threat of compulsory licensing to extract lower prices out of pharma companies, is paying attention. So is Kenya, which has a historically corrupt bureaucracy.

Full credit, then, to Margaret Chan, the World Health Organization's director general, for criticizing Thailand's move and defending IP protection. "I'd like to underline that we have to find a right balance for compulsory licensing," the Bangkok Post quoted her as saying last week. "We can't be naive about this. There is no perfect solution for accessing drugs in both quality and quantity." For her frankness, she has been branded a Big Pharma toady by the NGO packhounds.

Thailand's military junta has embraced bad economics in the name of populism since taking power last October. So far, these have mostly hit investors' pocketbooks. Now, the government is toying with something much more serious: its citizens' lives.

070209
WJ070203

Copyright © 2007 - The Wall Street Journal. Reproduction of this article (other than one copy for personal reference) must be cleared through the WSJ Permissions Desk.

Always watch for outdated information. This article first appeared in 2007. This material is designed to support, not replace, the relationship that exists between you and your doctor.

AEGiS presents published material, reprinted with permission and neither endorses nor opposes any material. All information contained on this website, including information relating to health conditions, products, and treatments, is for informational purposes only. It is often presented in summary or aggregate form. It is not meant to be a substitute for the advice provided by your own physician or other medical professionals. Always discuss treatment options with a doctor who specializes in treating HIV.

Copyright ©1980, 2007. AEGiS. All materials appearing on AEGiS are protected by copyright as a collective work or compilation under U.S. copyright and other laws and are the property of AEGiS, or the party credited as the provider of the content. .