Thailand widens scope of generic drugs

Frustrated by the price of imported medicines, the Thai government said Monday it would suspend patents on two prescription drugs, one for treating AIDS and another for heart disease. The suspension would allow Thailand to import or manufacture its own copycat versions, cutting the cost of providing free healthcare to its 64 million people.

The abrupt move has reignited a long-running debate in the developing world over public-health emergencies, such as the AIDS epidemic, that clash with intellectual-property rights held by Western companies. But it also ratchets up the pressure on large pharmaceutical corporations by pouncing on a popular heart-disease drug that rakes in billions of dollars in annual sales.

In recent years, Brazil, South Africa, and other countries have turned to generic copies of patented AIDS drugs – known as compulsory licensing – to force pharmaceutical companies to lower their costs or lose market access. Companies, however, complain that overriding patents dulls their incentive to invest in research for future medicines.

Investors in Thailand were already reeling from a series of policy shifts by a military-backed government installed in October, including revisions to laws on foreign ownership of Thai-registered companies. Some analysts detect a growing protectionist mood among policymakers, who have embraced a royalist creed of economic sufficiency, though government officials insist that Thailand remains open to trade and investment.

Pharmaceutical companies say this latest announcement is another blow to business confidence that will deter biotech industries from expanding here. "We're stunned by this decision. It's never happened before in Thailand. We've never had compulsory licensing, not under any elected government," says Teera Chakajnoradom, president of the Pharmaceutical Research and Manufacturers Association, which represents foreign drug producers in Thailand.

What makes Thailand's move so provocative – and potentially ripe for imitation – is that it widens the spectrum of public-health issues considered severe enough to warrant an overriding of patents. Until now, governments have intervened chiefly in the face of a widespread epidemic, such as AIDS. But by deciding to suspend the patent for Plavix, a top-selling drug for heart disease, Thailand has gone beyond other developing countries that license copycat AIDS drugs. Pharmaceutical companies warn that Thailand may also seek to break patents on drugs prescribed for other illnesses.

In a statement, the Ministry of Public Health said that because of the expense only 20 percent of around 200,000 affected patients in Thailand were receiving Plavix. It said that compulsory licensing would cut the cost per tablet from over $2 to as low as 20 cents, allowing doctors to increase patient access to the drug.

It cited a similar financial constraint on access to Kaletra, an anti-retroviral made by US-based Abbott Laboratories. Around 120,000 of an estimated 500,000 HIV-positive Thais currently receive a generic retroviral cocktail produced by a state-owned pharmaceutical company. However, an increasing number are becoming resistant to this cocktail, and 20,000 have been prescribed Kaletra, a second-line retroviral. Last November, Thailand also decided to license copies of another retroviral, Efavirenz, to the anger of US patent holder Merck & Co.

In 2001, Thailand was among 142 members of the World Trade Organization that signed the Doha Declaration, which confirmed the rights of poor countries to override intellectual-property laws for public-health emergencies. The following year, it began producing its own generic retroviral cocktail that eventually brought the cost per patient down to $34 a month, compared with $532 a month for imported branded versions, according to research by Oxfam.

Developing countries aren't the only ones willing to cast aside intellectual-property laws when it suits them. In 2001, the US invoked compulsory licensing to force Germany's Bayer to slash prices on Cipro, a patented anti-anthrax medication. "When rich developed countries see the public interest is at stake, they see this as a necessary measure to make sure essential medicines are available," says Pascale Boulet, a legal adviser to Medecins Sans Frontières in Geneva.

Anti-AIDS campaigners in Thailand say the government's stance is principled and justified by the scale of the problem. "We need new antiretrovirals. Most of the second-line drugs have patents, and this means the price is very high. Thailand can't support these prices," says Nimit Tienudom, director of the AIDS Access Foundation, which lobbies for patients' access to healthcare.

There may also be a political calculation at work. Around 95 percent of Thais are covered by a universal healthcare program that was introduced in 2002 by former Prime Minister Thaksin Shinawatra over the objections of influential critics within the healthcare industry. Branded the "30- baht scheme" – a reference to a program in which Thais would pay 30 baht (about 87 cents) for treatment – it proved a huge hit that girded Mr. Thaksin's image as a defender of the poor and helped him win a landslide reelection in 2005.

Since seizing power last September, the military regime has lifted the requirement to pay 30 baht and renamed the scheme universal healthcare. Foreign observers say that decision, which amounted to rebranding Thaksin's scheme for political purposes, may have strained resources and forced health officials to find new ways to cut costs, such as compulsory licensing.

While the Thai government caught the industry off-guard with its snap announcement, its aim could be to strengthen its negotiating hand, rather than go it alone. Health Minister Mongkol na Songkhla told reporters Monday that "We are willing to negotiate with the companies if they are willing to give some discounts for the import of their originals."

Mr. Teera said manufacturers were ready to be flexible. "We realize the problem of budget constraints of the Ministry of Public Health and we appreciate their efforts to provide better healthcare to patients. But compulsory licensing won't solve the problem. The best way is to negotiate."