Drug Company Reacts To Thai License; Government Ready To Talk

By Tove Iren S. Gerhardsen
One of the companies whose patent may be overruled by Thailand’s issuance of a compulsory license said it was caught off-guard by the Thai move, which was aimed at reducing drug prices. The Thai government says it is determined to execute the three such licenses it has issued recently, but said it remains open to dialogue with the companies.

Thailand’s licenses have been the subject of recent policy debates on the right of nations to decide for themselves when a compulsory license is in their interest. Many experts see the possibility of compulsory licenses as an effective tool for negotiating price reductions for developing country markets, but industry is concerned about the approach.

“We have learned from our past experience that prior negotiation before announcing the use of the government use [compulsory license] is not an effective way to bring the price down and reach better access. This is also the experience from all countries around the world that have done it,” a Thai official told Intellectual Property Watch.

“Our principle is that discussion is [a] must, but it is much more effective to discuss after the announcement,” the official said. “Most importantly is that this is totally in compliance [with] international and national law.”

A spokesperson for pharmaceutical company Sanofi-Aventis told Intellectual Property Watch recently that the company was “surprised and disappointed” by the Thai government’s announcement on 26 January that it had issued a compulsory license for the drug Plavix (clopidogrel), effective 25 January.

The spokesperson said that Sanofi-Aventis was not in discussions with the Thai government at this point, but said the company is evaluating its options and the situation in general. As for possible changes in the price of the drug, he said it was too early to tell.

Plavix is used to prevent cardiovascular diseases such a stroke and heart disease. Sanofi-Aventis was surprised by the compulsory announcement because Plavix benefits individual patients, and lack of access would not constitute a public health concern or an “extreme emergency” justifying a compulsory license, the spokesperson said. But in making this argument, he did not address the right of national governments under World Trade Organization rules to issue compulsory licenses for any non-commercial use, whether emergency or not.

A government is able to use “the subject matter of a patent” though the issuance of a compulsory license, provided certain provisions are respected, according to Article 31 of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The 2001 Doha Declaration on the TRIPS Agreement and Public Health clarifies that a TRIPS member can determine the grounds upon which a compulsory license is granted.

Plavix is considered a blockbuster drug, and after a generic version was sold for one month in the United States by another company (Apotex), Sanofi-Aventis entered patent litigation, a source said.

On 26 January, the Thai government also announced a compulsory license, or government use, for Abbott’s HIV/AIDS drug, Kaletra (lopinavir/ritonavir), and in December 2006 it issued a compulsory license for Merck Sharp & Dohme’s Stocrin (efavirenz).

Drug Availability Increases Under License

In the two months since it announced the first compulsory license for efavirenz, Thailand has imported a first batch of 16,000 bottles, and plan to import a total of 66,000 bottles over six months, a Thai official told Intellectual Property Watch on 16 February, adding that the deal had been made with the Indian company Ranbaxy.

But Thailand is still taking to the companies and the official said they will “never close the door.” Imports for the other two drugs will probably happen in late March or early April, he said, and when everything is ready, Thailand plans to produce drugs themselves.

The official said that the Thai government has tried to talk to the companies but prices have not been reduced sufficiently. “For the lopinavir/ritronavr we have tried several times to negotiate with Abbott in the last two years. They have reduced the price down but [it is] still too high to be affordable by our universal access to antiretroviral drug scheme,” the official said.

He added, though, it is not required under international law to negotiate with the patent holder before issuing a compulsory license, but rather that the companies concerned should be informed immediately upon announcement. “We have informed them on the same day of the announcement,” the official said.

“After the announcement and before the implementation, we discussed with all three companies. Even after we implemented the government use on efavirenz, we continued to discuss,” the Thai official said.

Industry Alarmed

The pharmaceutical industry appears to be alarmed at the developing country’s interpretation of the TRIPS flexibilities. “We thought we had an agreement on how the TRIPS mechanisms should be used, but obviously we have different interpretations,” one industry source said.

“In this case [Thailand], it is one government and the entire NGO community that think this is justified,” the source said, adding that this puts it all into question. “When Italy has its next financial crisis, will it also break all the patents?”

The source said it is time to have a serious conversation about all these aspects, and all parties have to acknowledge that everyone has a role to pay. Some people seem to rather want to see the entire pharmaceutical industry to go away, the source said.

Officials Struggle to Find Middle Ground

On the United States’ engagement in the Thai case, US Trade Representative Susan Schwab said in an 8 February letter to non-governmental organisation Knowledge Ecology International:

“Our trade policy dialogue with Thailand will continue to emphasize the importance of effective intellectual property protection as an element in that country’s effort to strengthen its investment climate and promote economic development. We will continue to stress the importance to Thailand of abiding fully by its WTO obligations, but will do so within the context of a full respect for the Doha Declaration and for Thailand’s ability to make appropriate use of the flexibilities embodied in WTO rules,” she said.

Separately, World Health Organization Director General Margaret Chan wrote a letter to the public health minister in Thailand that she “deeply regrets” that comments on compulsory licensing she made on a recent visit to Thailand were misrepresented in media. The Bangkok Post reported that Chan said that it was important to find the right balance for compulsory licensing, which was seen as a negative view on Thailand’s actions.

“They should not be taken as a criticism of the decision of the Royal Thai government to issue compulsory licenses, which is entirely the prerogative of the government, and fully in line with the TRIPS agreement,” she wrote.

In another development, Mark Dybul has been appointed US Global AIDS Coordinator. He was recently in Geneva to help elect the new executive director of the Global Fund to Fight AIDS, Tuberculosis and Malaria, Michel Kazatchkine, a physician and global health expert, replacing Sir Richard Feachem, the founding executive director. He will step down on 31 March after five years at the helm.

Dybul said President Bush had increased the US government’s commitment to global HIV/AIDS from $840 million when he took office to $5.4 billion as announced in the 2008 budget.

Dybul told Intellectual Property Watch that very few of the countries in which the US HIV/AIDS programme operates have patents, and said it was not correct that the programme was not supporting the use of generic medicines. It is important to “take a step back,” however, he said, and remember that HIV/AIDS is not going away yet. There is evidence that resistance to current drugs is developing, emphasising the need for developing new drugs and finding the right balance, he said.

Separately, WHO has published a corrigendum regarding a Malaria draft resolution that was discussed at the Executive Board meeting in January (IPW, Public Health, 6 February, 2006).

Tove Iren S. Gerhardsen may be reached at tgerhardsen@ip-watch.ch.