In Clash With Activists, Critics Charge Thailand Violation Of Trade Rules

by Martin Vaughan
Published at Intellectual Property Watch

WASHINGTON, DC – Critics of Thailand’s decision to issue compulsory licenses for several patented drugs said the Thai government violated global trade rules, as they clashed with public health activists at a 16 March briefing on Capitol Hill, home of the United States Congress.

Ronald A. Cass, dean emeritus of Boston University Law School and chairman of the Center for the Rule of Law, a property-rights organisation, said the circumstances of the Thai case do not fall within narrow exceptions in the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on when a government may use a patented technology without first negotiating with the patent holder.

Cass also defended the 14 March announcement by Abbott Laboratories that it has withdrawn requests to register in Thailand seven new medicines, including a new heat-stable version of the AIDS drug lopinavir/ritonavir, marketed by Abbott as Kaletra. “If you loaned someone your car and they stole it, would you then trust them with the keys to your home?” Cass queried.

Since last November, Thailand has announced it will import or manufacture generic versions of three drugs, including the AIDS drugs efavirenz, manufactured by Merck, and Kaletra. Health activists at the briefing vigorously asserted that in doing so, Thailand is fully within its rights under the TRIPS agreement and acted responsibly to deliver life-saving medicines to one of the largest HIV-infected populations in the developing world.

“TRIPS has no limitations whatsoever on the grounds under which a country can issue a compulsory license,” said Robert Weissman, director of Essential Action. “The only issue is whether it was legitimate for Thailand not to engage in prior negotiations with the patent holder.”

Participants dissected the Thai decision and Abbott Laboratories’ response at a forum sponsored by House Representative Tom Allen, a Democrat from Maine, and Senator Sherrod Brown, an Ohio Democrat. Todd Steyn, a staffer for Allen, moderated the discussion but no lawmakers were present. Also participating were: James Love, director of Knowledge Ecology International – which organised the event, Richard Kjeldgaard, associate vice president of international intellectual property at the Pharmaceutical Research and Manufacturers of America (PhRMA), and Dr. Buddhima Lokuge, US manager of the Campaign for Access to Essential Medicines at Médecins Sans Frontières (MSF).

Love said that Thailand’s action is legal under international trade law, and “is not shocking at all if you look at what we do in the United States,” adding that the US government has issued five compulsory licenses since June 2006 alone for non-essential consumer products such as software, car parts and set-top television boxes. KEI issued a paper at the event showing the legal basis for Thailand’s actions and countering assertions being made by industry.

Was a Consultation Necessary?

The dispute centres on language in Article 31 of TRIPS that explicitly permits a country to issue compulsory licenses if it has “made efforts to obtain authorisation from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time.” The Thai government says it did consult with Abbott and other drug companies, but that also is a matter of contention.

The consultation requirement may be waived in cases of “national emergency or other circumstances of extreme urgency or in cases of public non-commercial use,” according to the TRIPS provision.

Cass said that since a military coup toppled Thailand’s government last autumn, defence spending has increased by $1.1 billion while public health spending has been cut by $12 million, hardly indicative of a public health emergency, he claimed. In addition, under the compulsory license Thailand would have a for-profit, state-owned firm manufacture the drugs, which Cass argued does not fit the exception for public non-commercial use.

But nongovernmental groups read the public non-commercial use clause much more broadly, and argued that the exception applies since Thailand has ordered the manufacture of Kaletra and other drugs for supply to recipients of its government-sponsored health plan. There is no requirement in TRIPS that the manufacturing under a compulsory license be done on a not-for-profit basis, said Weissman.

In a February white paper, the Thai Health Ministry said that its public health budget represents 10 percent of its overall budget, and that expenditures on antiretrovirals to combat AIDS have increased ten-fold since 2001 to top $100 million this year. But even that amount will only supply 82,000 patients out of 500,000 infected with HIV, a Thai government representative said at the briefing.

The Bush administration so far has chosen at least publicly to stay out of the fray, and US supporters of the Thai government’s decision say this bolsters their contention that Thailand’s actions do not violate TRIPS. In a 17 January letter to Allen and other House members, US Trade Representative Susan Schwab stepped lightly around the question.

“We have not suggested that Thailand has failed to comply with particular national or international rules,” she wrote. “We have indicated that it would be appropriate for the Thai authorities to respond to any requests for direct discussions by concerned stakeholders, including among others, the patent holder; we have not sought to insert the US government into any such discussions.”

Calls for Renegotiation of FTA Provisions on IP

Also in Washington, a group of House Democrats led by Rep. Henry Waxman, a Democrat from California, are pushing the Bush administration to renegotiate intellectual property provisions in free trade agreements with Colombia, Panama and Peru. Intellectual property is one of several areas Democrats want to re-open as the White House seeks congressional approval for those deals before fast-track trade-negotiating authority expires on 30 June.

In a 12 March letter to Schwab, Waxman and other Democrats urged the reconsideration of several provisions they said hamper access to medicines in those and other developing countries with which the US has free trade agreements. “Protecting innovation is important, but the intellectual property provisions in current FTAs extend pharmaceutical monopolies without sufficient regard to consumer access and public health,” they wrote.

Recent US free trade agreements have required countries to protect clinical test data for a minimum of five years after a patented drug receives marketing approval. House Democrats wrote that such protections “ignore fundamental differences” between the history of US law on generics and the situation in developing countries, and create “the potential for serious harm.”

They also raised objections to requirements that countries grant patent extensions to reflect delays in approval, but set no limits on the period of those extensions. They also pointed to things they said are left out of bilateral trade agreements, noting that the text of agreements do not refer directly to countries’ right to issue compulsory licenses, although those rights are mentioned in side letters to some agreements, for example the US-Colombia accord.

Access to medicines is one of a handful of second-tier issues – along with environmental safeguards and port security provisions – in negotiations between the Republican Bush administration and congressional Democrats over the bilateral trade deals. Democrats at the centre of the talks, including House Ways and Means Committee Chairman Charles Rangel of New York and Rep. Sander Levin of Michigan, have trained nearly all of their focus on hammering out a compromise on labour provisions that are seen as the linchpin to any agreement.

Neither Rangel nor Levin signed the Waxman letter, although Levin has said he supports changes to provisions on intellectual property and health. Democrats and trade officials are seeking agreement prior to the end of March, in order to meet notification deadlines under the US fast-track law.