Compulsory Licences are the Right Medicine

by Robert Weissman, Guest Columnist
Published at The Nation (Bangkok)

The compulsory drug licences Thailand has issued over the past year have shown the world how to balance public health priorities with international and national legal obligations to patent holders. The implemented compulsory licences have led to dramatic cost savings and enabled the Thai public health system to expand access to life-saving medicines. The recently issued compulsory licences for cancer drugs promise to do the same, if they are implemented.

The benefits have not been for Thailand alone. The first round of Thai compulsory licences led brand-name drug companies to cut their prices for key products on a worldwide basis. Abbott dropped its middle-income country price for the crucially important Aids drug Kaletra from US$2,200 to $1,000, for example.

The new Thai government is now undertaking a review of the set of compulsory licences on cancer drugs issued by the previous minister of public health. These licences offer the prospect of making essential medicines available to people who need them but otherwise will be denied access. It is hard to imagine a legitimate policy reason for the licences not to be implemented, but it is the right of the government to review the policy.

Whatever the government decides to do, however, it should make its decision on the merits, not influenced by the reprehensible but groundless threats from the brand-name drug companies.

News accounts indicate that PhRMA, the US brand-name pharmaceutical industry trade association, has threatened that, if Thailand implements the compulsory licences on cancer drugs, it will lobby to have Thailand designated a “Priority Foreign Country” under the US Special 301 process. It has also been intimated that the United States might deprive Thailand of other trade benefits, including reduced tariffs on exports to the US available under the Generalised System of Preferences (GSP).

Although PhRMA is a powerful lobby, Thailand should not take these threats seriously. They have no basis in US law or political reality.

As a matter of US law, the US Trade Representative (USTR) may designate a country a Priority Foreign Country if it has “the most onerous and egregious acts, policies, and practices which have the greatest adverse impact (actual or potential) on the relevant US products”. Since there is no doubt whatsoever that Thailand’s actions are compatible with its obligations under TRIPS, a point that USTR has never disputed, the USTR could not make such a designation.

In the past, the USTR has complained about an alleged failure of the Thai government to negotiate with patent holders before issuing compulsory licences. But there is no question that the government undertook extensive negotiations before issuing the recent licences on cancer products. It is also clear that, because the Thai compulsory licences are for government use, Thailand has no obligation under World Trade Organisation rules to engage in negotiations with patent holders. As the WTO says, in cases of government use, “there is no need to try first for a voluntary licence”.

Thailand did lose some GSP privileges in the United States last year. But this was part of the normal process of reducing privileges for growing and competitive economies like Thailand’s. It is likely to continue over time, with no connection at all to Thai decisions on compulsory licensing.

Even more important for the Thai government and people to understand than the legal rules around US trade preferences are rapidly changing political realities in the United States. PhRMA is an industry whose power and influence is on the wane.

Each of the three leading US presidential contenders is much more critical of the industry than the current president. Hillary Clinton has emphasised her support for the Doha Declaration on the TRIPS Agreement and Public Health and has pledged to “support trade policies that protect and expand poor countries’ right to affordable, quality-assured generic drugs for important health needs”. Barack Obama likewise has emphasised that he “supports the rights of sovereign nations to access quality-assured, low-cost generic medication to meet their pressing public health needs”. John McCain has not issued a detailed policy statement on these matters, but he has characterised brand-name pharmaceutical companies as “the big bad guys”.

Whichever of these candidates is the next US president, it is a virtual certainty that US policy will place much more emphasis on public health and patient concerns, and be far less responsive to Big Pharma’s policy agenda.

Over the past year, Thailand has demonstrated how to ensure that essential medicines are made available to people who need them. Now is the time for Thailand and its people to reap the benefits of the government’s courageous actions, not to succumb to the empty bluster of Big Pharma.

Robert Weissman is the director of Essential Action, USA.