Global Access to Medicines Bulletin: Thailand Lowers Medicine Prices; Faces U.S./E.U. Pressure

The latest issue of Essential Action’s Global Access to Medicines Bulletin discusses how Thailand’s generic medicines policy stands as a model for developing countries of how to use legal tools — issuing compulsory licenses on patents — to expand access to essential medicines. The Thai experience shows that generic competition lowers drug prices and makes expanded access possible. It also illustrates the benefit of widespread compulsory licensing focusing on a wide range of diseases.

Despite its success, the Thai medicines policy is in danger of being canceled. Big Pharma, the U.S. and E.U. continue to pressure Thailand to cease the legal use of compulsory licenses to expand access to medicines. Moreover, it remains unclear whether the new Thai government will continue to actively implement the policy.

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Essential Action’s Global Access to Medicines Bulletin
Issue No. 3, April 14, 2008

Special In-Depth Issue:
Thailand Lowers Medicine Prices; Faces U.S./E.U. Pressure

Over the last year and a half, Thailand has shown the way forward to ensure that artificially high drug prices do not deny medicines to people who need them.

In November 2006 and January 2007, the country issued three “compulsory licenses” — authorizations of generic competition for products that remain on patent — for two key, newer AIDS drugs and a heart disease medicine [1]. In January 2008, it issued an additional four compulsory licenses on cancer medications.

Legal under national law and international trade rules [2], the compulsory licenses have led to sharp price reductions, with more to follow. The lower prices have enabled Thailand to expand the number of people receiving important drugs. And Thailand’s actions have spurred brand-name companies to lower their prices globally.

Unfortunately, instead of congratulating the country for its public health leadership, the United States and European Union have pressured Thailand to rescind the compulsory licenses. And, Thailand’s new government — elected in late January — has expressed considerable unease with the compulsory licenses, agreeing so far to implement the cancer drug licenses only under pressure from Thai consumer and health groups.

Thai compulsory licenses a breakthrough

Many other developing countries have previously issued compulsory licenses, including Eritrea, Ghana, Indonesia, Malaysia, Mozambique, South Africa and Zambia. Brazil issued a compulsory license after the first round of Thai licenses [3].

Industrialized countries, including the United States, routinely issue compulsory licenses [4]. In March 2007, Italy issued a compulsory license on finasteride, the active ingredient in the male-pattern baldness drug sold by Merck under the brand name Propecia [5]. Brand-name drug companies also frequently seek compulsory licenses. Roche is presently seeking a compulsory license for the right to an Amgen-controlled anemia drug, for example [6].

Despite the frequency with which compulsory licenses have been issued, both public health advocates and Big Pharma viewed the Thai actions as a breakthrough.

First, the government issued licenses on second-generation HIV/AIDS drugs — efavirenz (brand name Stocrin, sold by Merck) and lopinavir/ritonavir (Kaletra, sold by Abbott). These were the first compulsory licenses on the second generation of AIDS drugs, which remain much more expensive than the older medicines for which generic competition is now robust. Second, the licenses were the first issued by a middle-income country with substantial market size — large enough to start the process of reducing the costs on the raw materials markets. Third, the January 2007 Thai license on clopidogrel (Plavix, sold by Sanofi-Aventis) signaled a refusal to let compulsory licensing be confined to AIDS drugs. The licenses in January 2008 covering cancer drugs further expanded the compulsory licensing initiative outside of the realm of HIV/AIDS drugs.

Health-driven policy

Thailand issued a very detailed rationale for its compulsory license policy, including two lengthy white papers [7].

Thailand adopted a universal health system in 2001, under which all Thais have a right to medicines on the national drug list. Compulsory licenses would be issued, the government explained, for drugs meeting important public health objectives, where “the price of these drugs and medical supplies [is] too high to be affordable by the government to
supply to the beneficiaries of the national health insurance schemes to achieve the universal access policy.”

Regarding AIDS drugs, the government estimated that 50,000 Thais will need second-line treatment in the near future. The cost of providing lopinavir/ritonavir at Abbott’s price to this population would be more than the entire current budget for ARVs, according to the government. The immediate price discounts from the compulsory license would eventually enable the government to provide an additional 8,000 people with the medicine, with that number expected to grow as generic costs fall over time.

The government also maneuvered to preserve meaningful markets for the companies whose products were compulsory licensed. The compulsory licenses applied only to the public health system. The brand-name companies’ monopolies still apply in the private sector, which serves richer Thais and a considerable population of medical tourists who go to Thailand for cheaper treatment options.

The generic competition introduced by compulsory licenses brings dramatic price reductions. For clopidogrel, the price has fallen by 98 percent. For the cancer drug compulsory licenses, the government reports:
– The generic price for the lung/breast cancer drug docetexel (Taxotere, sold by Sanofi-Aventis) is 16 percent of Sanofi-Aventis’s price.
– The generic price for the breast cancer drug letrozole (Femara, sold by Novartis) is 3 percent of the Novartis price.
– Roche’s price for the lung cancer drug erlotinib (Tarceva) is roughly four times the generic price.
– Novartis’s price for imatinib (Glivec) is 18 times more expensive than generic versions. (Novartis agreed to donate supplies of imatinib, and Thailand is not planning on implementing the imatinib license.)

As of January 2008, Thailand has been able to roughly triple the number of people receiving the HIV/AIDS drugs efavirenz and lopinavir/ritonavir, thanks to the lower prices achieved with generic competition [8].

The price reductions obtained by Thailand have also benefited people in other developing countries. After Thailand issued its compulsory license on Kaletra, for example, Abbott lowered its middle-income-country price from $2,200 a year per person to $1,000 [9].

Big Pharma, U.S., E.U. pressure Thailand to revoke medicines policy

Big Pharma has reacted very negatively to the Thai compulsory licenses. In a striking move in March 2007, Abbott Laboratories withdrew applications to market seven new medicines in Thailand. Public health advocates labeled the withdrawal as an attempt at “blackmail.” Médecins Sans Frontières/ Doctors Without Borders said it was “unethical and
utterly unacceptable [10].”

The U.S. government quickly registered protests with Thailand after the first compulsory license was announced, but then retreated somewhat in the face of protests from Members of the U.S. Congress. The U.S. Trade Representative (USTR) implicitly acknowledged that Thailand’s actions were permissible under the terms of the World Trade Organization’s
Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) [11].

In April 2007, however, USTR placed Thailand on the “Priority Watch” list in the annual Special 301 Report, a listing of countries the United States claims are engaging in allegedly egregious violations of patent, copyright and related policies preferred by the United States. Countries so listed “are the focus of increased bilateral attention concerning the problem areas,” and face the distant threat of trade sanctions if the United States concludes issues worsen [12].

The United States continues to complain about Thailand’s compulsory licensing policy, although the United States has not imposed any actual penalties, and almost certainly will not [13].

The European Commission has followed suit, asking that Thailand review its compulsory licensing policy [14].

Meanwhile, the compulsory licensing policy has been on shaky ground in Thailand. The compulsory licenses were a hallmark of the Public Health Minister who served under the military government that ruled Thailand from September 2006 to January 2008. The new government’s Public Health Minister was openly skeptical of maintaining the cancer drug compulsory licenses issued by the previous minister in the last month of his tenure. Health and consumer groups launched a major campaign to defend the compulsory licenses, and the new minister announced a decision in March to implement the licenses [15]. They are still subject to review by the full government, however, and it remains unclear whether they will ultimately be implemented or not.

For public health campaigners, the Thai compulsory licensing experience stands as a model of how to use legal tools to expand access to essential medicines. The Thai case reiterates how generic competition can lower prices and make expanded access possible. It also illustrates the benefit of widespread compulsory licensing focusing on a wide range of diseases.

Web links:
[1] http://www.cptech.org/ip/health/c/thailand/
[2] http://www.wcl.american.edu/pijip/documents/pijip04262007.doc
[3] http://www.cptech.org/ip/health/cl/recent-examples.html and
http://www.keionline.org/index.php?option=com_content&task=view&id=41
[4] http://www.essentialaction.org/access/uploads/Weissman.ICCL.rtf and
http://www.keionline.org/index.php?option=com_content&task=view&id=41
[5] http://www.agcm.it/agcm_eng/COSTAMPA/E_PRESS.NSF/
92e82eb9012a8bc6c125652a00287fbd/28653b373e56772ac12572ab003a4d68

[6] http://www.reuters.com/article/marketsNews/idUSN2642636620080326
[7] http://www.essentialaction.org/access/uploads/thai-cl-white-paper.pdf and http://www.essentialaction.org/access/uploads/2d.Thai.CL.whitepaper.pdf
[8] http://www.essentialaction.org/access/index.php?/archives/124-Data-on-Thai-Compulsory-License-Benefits.html
[9] http://www.abbott.com/global/url/pressRelease/en_US/60.5:5/Press_Release_0442.htm
[10]http://www.accessmed-msf.org/media-room/press-releases/press-release-detail/article/msf-abbott-should-reconsider-its-unacceptable-decision-to-not-sell-new-medicines-in-thailand/
[11] See http://www.cptech.org/ip/health/c/thailand/congressional-schwabletter-thailand-10jan06.pdf and http://www.cptech.org/ip/health/c/thailand/letter.pdf
[12] http://www.ustr.gov/Document_Library/Press_Releases/2007/April/SPECIAL_301_Report.html
[13]http://www.ustr.gov/assets/Document_Library/Reports_Publications/2008/2008_NTE_Report/asset_upload_file823_14611.pdf
[14] http://www.actupparis.org/IMG/pdf/CAB24_0222100119_001.pdf
[15] See http://ipsnews.net/news.asp?idnews=41286 and www.reuters.com/article/latestCrisis/idUSBKK147647

Published by Essential Action’s Access to Medicines Project
P.O. Box 19405, Washington, DC, 20036, USA
Tel: (1) (202) 387-8030
www.essentialaction.org/access/
Editors: Sarah Rimmington [email protected]
Robert Weissman [email protected]

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