EU Split Arises Over Thai Effort To Obtain Cheaper Patented Drugs

By David Cronin for Intellectual Property Watch
A dispute has erupted between two of the European Union’s most powerful institutions over Thailand’s decision to circumvent pharmaceutical patents in order to boost its supply of cheap medicines.

Peter Mandelson, who holds the trade portfolio in the EU’s executive arm, the European Commission, recently wrote to several Thai ministers after Bangkok decided to overrule patents on three medicines by issuing compulsory licenses. The action is allowable under international trade rules.

Mandelson expressed concern over reports that Bangkok “may be taking a new approach to access to medicines” by stating that “if drug companies wish to do business in Thailand, they should offer their drugs for no more than 5 percent above” the cost of generic versions of the products in question.

According to Mandelson, “this approach would be detrimental to the patent system and so to innovation and the development of new medicines” and “it risks forcing more drug companies to abandon their patents.”

But members of the European Parliament (MEPs) have taken exception to Mandelson’s letter, which was dated 10 July but only became public in late August.

Many MEPs believe that Mandelson should not be seeking to exert pressure over developing countries which overrule drug patents in order to address public health needs.

They also feel that Mandelson was insensitive to questions raised by the Parliament over the relationship between global intellectual property rules and access to medicines.

In a resolution adopted on 12 July, the Parliament called on the Commission and the EU’s governments to provide political support for states who wish to invoke provisions in the World Trade Organisation’s agreement on trade-related intellectual property rights (TRIPS) that allow them override patents for public health reasons. .

Helmuth Markov, the German MEP who chairs the Parliament’s committee on international trade, confirmed to Intellectual Property Watch that he intends to send a written complaint to Mandelson next week.

Markov said that it would be premature to say what the contents of his complaint will be as he has to discuss it with other members of his committee at an 11-12 September meeting.

He said, however, that Mandelson “did not chose the right timing” for the letter to Bangkok, given that it coincided with the concerns raised by the European Parliament.

Next week’s international trade committee will assess a request that the Parliament ratify a 2005 amendment to the TRIPS accord relating to access to medicines. The protocol is designed to make permanent a temporary waiver from TRIPS agreed by the WTO in 2003, allowing poor countries lacking production capacity to address public health emergencies by importing cheap generic versions of patented drugs produced under a compulsory licence.

The European Commission and EU governments have asked the Parliament to approve the protocol this year. Yet MEPs so far have questioned whether the waiver has proven too complex and ineffective for it to be of practical benefit to the needy. Rwanda this summer became the only developing country so far to make use of the waiver’s provisions.

Did the Commission Take the Right Stance?

Swedish Green MEP Carl Schlyter described Mandelson’s letter as “counterproductive.”

He argued that the Commission has been trying to ensure that compulsory licenses are only used by countries classified as ‘least-developed’ by the United Nations, rather than by any poor and middle-income country facing serious health problems, and which represent larger markets for patented drugs. .

“The Commission fails to understand the purpose of the compulsory licensing system,” he said, adding that the executive “should be happy” that Thailand has been making use of the flexibilities applying to TRIPS.

But a Commission official handling trade issues claimed that Mandelson’s letter “has been misrepresented and unfairly maligned.”

The official said that Mandelson was not seeking to question the three compulsory licenses issued by Thailand since late last year but to seek clarification about reports it was planning to circumvent patents systematically when it regarded the price of particular medicines as too high.

“We welcome the clarification we have received Thailand that it has no intention of doing so,” the official said, arguing that the Commission accepts that patents can be circumvented when dealing with public health emergencies.

“In two of the cases where Thailand used compulsory license, it was to deal with AIDS, which meets anyone’s understanding of an urgent public health issue,” the official said. “Something like heart disease [the third compulsory license], perhaps does not meet the criteria.”

Thailand has an estimated 600,000 people who are HIV positive and has recorded some 300,000 deaths from AIDS.

In November last year, the government decided to allow off-patent production of Efavirenz, a patented AIDS treatment manufactured by Merck Sharp and Dohme. During 2007, it has overruled patents on Kaletra, another AIDS drug, made by Abbott. It has also announced its intention to begin importing Indian-made generic versions of Plavix, a blood-thinner used in treating heart disease, made by Sanofi-Aventis.

Thai Reply

Krirk-krai Jirapaet, the Thai minister of commerce, responded to Mandelson in a letter dated 8 August. The minister said that both WTO rules and Thailand’s 1991 Patents Act allow government agencies to use compulsory licenses without prior authorisation from the patent holders. But he also said that a committee set up by the Thai health ministry had entered into negotiations with drug companies holding patents of drugs for which compulsory licenses had been issued.

Alexandra Heumber, an access to medicines campaigner with the humanitarian organisation Médecins Sans Frontières (MSF), said that compulsory licenses are proving vital in ensuring a greater supply of second-line treatments for AIDS – medicines required by patients who have developed a resistance to their previous prescription. Patented versions of second-line treatments are usually unaffordable for poor countries, MSF says.

“If the European Parliament doesn’t react strongly to Peter Mandelson’s letter then the consequences will be quite worrying,” Heumber added. “The Commission and EU governments need to support countries using the flexibilities allowed for by TRIPS but in practise this is not what’s happening.”

David Cronin may be reached at info@ip-watch.ch.