Notes on PhRMA’s Billy Tauzin on Thailand CLs and Other Issues

by Marcia Carroll
Multinational Monitor

Marcia Carroll of Multinational Monitor yesterday joined PhRMA’s Billy Tauzin’s teleconference following his meeting with the Thai Minister of Health. Tauzin’s remarks were interesting, and worth reviewing.

The notes that follow below are not verbatim, but they are pretty close.

Comments of Billy Tauzin, President and CEOof PhRMA
Teleconference, May 22, 2007

We had a dialogue with the minister of public health of Thailand. It was a very frank and I think helpful discussion of the concerns that we have about the use of compulsory licenses in Thailand, under the trips agreement.

We hope to encourage more consultation and negotiation and less of this sort of confrontational resolution through the use of CLs, and more through negotiated agreements.

We impressed upon the Minister our deep concern that the use of compulsory licensing sends a very negative signal concerning the investment of research dollars into critical medicines regarding diseases that all of us share and are combating — it is not helpful for research and development (R&D) of those critical products.

Concern that middle tier countries — Thailand is the 21st richest country according to the World Bank — exercising CLs has the effect of shifting the burden of R&D to patients in this country. Patients in this country should not be required to bear an unfair burden. Countries should share the burden to extent of their means.

CL is a sort of admission of failure of negotiation and consultation; it should be rare, not the rule.

We received some assurance of this.

They expressed frankly the need for negotiations to be timely and to respect concerns of poverty of some citizens; we acknowledged this, but expressed deep reservations about CLs without every compromise and negotiation.

Thais assured us they are anxious and willing to continue negotiations with PhRMA companies.

We tried to draw a distinction between middle tier countries to help us support R&D [and LDCs]; they should share the burden; rather than leave it to Am citizens to carry burden alone.

Very dangerous consequences for R&D for critical medicines for critical diseases [if compulsory licenses become routine].

Our concerns are their concerns.

Q: What if Thailand proceeds with other CLs on non-AIDS products? Would you urge the US government to file a case at the WTO?

Tauzin: The US governmentt has obligation under Section 301 to report on intellectual property (IP) protection.

Thailand can’t violate patents and then protest that it shouldn’t be cited for not protecting IP.

We got assurance from the ambassador that have a duty to respect patent rights.

We’ve urged the US government to express in strongest terms [concern]; and if there is no change, they would have to consider options, including removal of preferential trade treatments in terms of future trade relations.

If other countries follow their example across the span of disease categories, then the whole IP system would crumble, and support for R&D.

Q: Why is Thailand so important?

Tauzin: It is not just what Thailand is doing. Brazil has sort of emulated Thailand.

We’ve heard in the press that other countries are being urged to do so also.

There could be “a spreading epidemic of disrespect for IP rights.”

Thailand is a small share of the [global] market, but any dimunition of IP in the area sends huge, important signals, to investors and companies about their future plans.

Q: What do you know or learn about Thai CLs on cancer drugs; and, what’s your assessment of how WHO DG Margaret Chan is handling this question?

Tauzin: I have no info on cancer drug CLs.

Regarding Margaret Chan, our impression of her understandings of this issue and complexities of it — is that she has a very firm grip on the issue.

We also understand how difficult it is.

Bottom line is that these are complex issues that will require a great deal more discussion.

Margaret Chan is entirely capable and competent in this area, and we trust we will be able to work with her and WHO moving forward.


Q: Related to Thai-company negoiations.

Tauzin: Under Am antitrust law, we can’t be associated with individual companies’ discussions. Sole discretion.

PhRMA companies have a long track record of philanthropic work around world — free clinics, a great deal of direct assistance — as they do to the poor in this country.

Q: The Thai health minister is reported to have said there will be noCLs if lower cost products are available from PhRMA companies.

Tauzin: I can’t discuss actual costs; we did broadly talk about our concern that developing countries like Thai have some responsibility to fund the global efforts at R&D; the problem of how mechanically continue to assist poor in world and have countries that can afford it — to support R&D [is something we will keep grappling with].

We literally acknowledged that we’ve seen mixed reports on those issues — all we know is that “a CL is an admission of failure.”

These drugs are expensive to Americans. Americans are not going to put up with [high prices in the US and lowered prices elsewhere] forever.

How do we who are blessed with better resources collectively share the burden, and at the same time continue to sponsor and fund the enormous cost of R&D?

I told the Thai health minister that I wouldn’t be alive today but for very expensive medicines developed here in America. There are folks in this world who don’t have access [to such medicines, and should].

Have to work out some balance world. … Those of us in devleoped and devleloping world who can collectively shoulder that burden and do so.

Q: How did the minister respond to the notion that mid tier countries should bear some of the R&D burden?

Tauzin: He and the delegation stressed the Thai concern — their poor, their budget problems; as you know, they’ve dramatically increased military spending.

We stressed the need for balance.

There are conflicting numbers on whether the government is expanding coverage in Thailand.

Q: What is your reaction to the Thai Minister being named chair of UNAIDS; and do you expect to see more expressions of concern from the Congress, as with the Lieberman letter?

Tauzin: The appointment was one of the reasons that we raised the concern that Thailand’s example not be emulated around the world.

This is gong to be controversial for a long time. Whenever trying to find balance in policy; deal with burden of cost sharing and extraordinary concern about access to medicines [then issues are difficult].

Look at the PDUFA bill; you will see a strong sense of the senate, expressing real concern about abuses of CL and IP and the need for respect for R&D.

This is not going to be easily resolved. Balance is never easily achieved

A CL is not balance; it is a failure of balance. Negotiations and respect for IP; mutual sharing of responsibilty for cost of medicines that save lives is where need be.

Q: As you know, USA for Innovation has been running a series of advertisements in the US and Thai press about the Thai decision to issue a compulsory license. First, do you agree with the thrust of the USA for Innovation ads. And second, do you know who has been funding USA for Innovation — so far as you know, has Phrma or any Phrma member company, or any of their affiliates, funded the group?

Tauzin: Those are not our ads, we’re not behind them; I don’t know who is funding them.

I can’t comment on it; I wish I could.

I don’t know; if I did, I would tell you.

Q: Response to Bill Clinton’s comments, contrasted with Al Gore supporting PhRMA.

[More response to previous question: If the ads agree with our position, so be it.]

I wrote President Clinton a letter a week ago, urging him to a sit down; I met with him at the White House when he and President Bush 41 were there for Katrina relief and Clinton suggested we talk together regarding what we could do with his foundation.

I saw his last statement on Thailand as an opportunity to open that dialogue.

Our concern with his announcement was that it seemed to encourage more of what is happening in Thailand, and that is of deep concern to us.

I was pleased that Al gore has expressed concern about protection of IP; he has been an advocate for a long time. He and I worked in the House and Senate to advance satellite television — we had to override President Clinton’s veto. I know of his deep concerns for protecting innovation and invention, for which this country is so famous.

Welcome his help in resolving.

Q: Would you support prize funds or methods of funding that are alternative to the existing patent-based system?

Tauzin; No.

We believe they would be very counterproductive to investment in R&D.

There are other good ideas [about how to support innovation], but IP protection has to be at the center of it.

Even countries with strong dictatorial governments, there’s a recognition that free enterprise works best for their citizens.

If you begin dismantling the whole basis upon which people invest in R&D and if you break that system down, you will see fewer companies and people investing in R&D.

You should expect patients to get hurt.