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1 April 2008
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Health: Recent Thai compulsory licenses and the aftermath

Please find below a news story on the Thai compulsory licences. It was first published in SUNS #6442 and is reproduced here with permission.

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Sangeeta Shashikant
Legal Advisor
Third World Network

Health: Recent Thai compulsory licenses and the aftermath
Published in SUNS #6442 dated 27 March 2008

Geneva, 26 Mar (Sangeeta Shashikant) -- In the past two weeks, the Thai government has continued to come under pressure from the United States administration and the European Commission for its move to retain the compulsory licenses for anti-cancer drugs that the previous Health Minister had initiated.

The US has proposed to Thailand to take part in a joint committee to be set up to discuss its enforcement of compulsory licensing of the cancer drugs, according to a recent Thai media report.

And the European Commission is still intent on complaining to Thailand, according to a news report last week.

But it looks as if these "threats" to Thailand are really empty as the US Trade Representative's office and the EC both admit that what Thailand did was within its rights under the WTO's rules. This point is also supported by a recent report on the Thai compulsory licenses by international agencies led by the WHO and including the WTO and the UNDP.

On the US move, the director-general of the Thai Department of Intellectual Property, Puangrat Assawapisit, said that "the US private sector, especially pharmaceutical companies, want Thailand to hold talks with American drug patent holders. They have suggested [that] a joint committee should be set up."

The three relevant Ministers in charge of commerce, public health and foreign affairs have yet to decide on Thailand's response to this proposal, said Puangrat.

Thailand has implemented compulsory licensing for the following cancer drugs -- Docetaxel, used mainly for the treatment of breast and lung cancer (sold as Taxotere by Sanofi Aventis); Erlotinib, used to treat lung cancer (sold as Tarceva by Roche); and Letrozole, used to treat breast cancer (sold as Femara by Novartis).

A fourth drug - imatinib for treating leukemia and other cancers (and sold as Glivec by Novartis) - was also to have been subjected to a compulsory license, but the license was not implemented after Novartis reportedly agreed to give its drugs free to a Thai public health programme.

Earlier, in November 2006 to January 2007, the then Health Minister Mongkol na Songkhla, had also arranged for compulsory licenses for two anti-AIDS drugs and one drug for treating heart ailments.

The new compulsory licenses for cancer drugs were announced by Mongkol in January 2008 just before he left office. After the elections, the new Health Minister Chaiya Sasomsap on 7 February announced that he would review the compulsory licenses, citing adverse effects on the country's relations with the drug industry.

Following an outcry by many Thai and international NGOs and from opposition political leaders and parliamentarians, Chaiya finally announced on 10 March that the licenses would be retained and enforced on the three cancer drugs.

Cancer has become the main cause of death in Thailand. An official study showed that Thailand could save almost 4 billion baht ($125 million) in 2008-2012 through the use of cheaper generic drugs (which are 4 to 30 times cheaper than the branded products) that are enabled by the compulsory licensing.

Thai and international NGOs and patients' groups have hailed the new government's decision. However, they are still concerned that the Minister has transferred a key official who has played a leading role in the compulsory licensing exercise from his post as head of the Food and Drug Administration.

There have been threats by the association of international drug companies to get the US administration to take trade sanctions against Thailand. However, Washington-based NGOs and analysts believe that it is unlikely that the US administration can or will take concrete action against Thailand.

The European Commission was earlier reported to be considering taking a WTO case against Thailand for its actions, but this was later denied. However, an IPS article from Brussels on 19 March said that an EC official indicated that the EC may make a "fresh complaint" to Thailand and to request the government to reconsider its move.

"The Commission has been in constant contact with the Thai authorities and has stressed that compulsory licensing, while allowed by WTO rules, should be regarded as a last resort option, and that negotiations and collaboration with pharmaceutical companies should be sought," a Brussels-based trade official told IPS. "The EU is hoping that this will be the line of the new government."

Last year, EU trade commissioner Peter Mandelson wrote to Thailand about his concern that it had decided on "systematic use" of compulsory licensing in cases where they viewed the price of a patented drug as prohibitive, as this approach would damage innovation.

Thailand is not the only nor the first developing country to issue compulsory licenses for drugs. Other countries include Malaysia, Indonesia, Brazil and Ghana, while several developed countries have also made use of compulsory licensing.

However, the Thai actions have elicited particularly strong reactions from the drug industry and to some extent from the US and EC governments because Thailand is the first developing country to recently issue compulsory licenses for drugs for the treatment not only of AIDS but also other diseases - heart ailments and cancer.

Another frequent complaint by industry and Western governments is that the Thai authorities did not talk or negotiate with the companies which held the patents, a charge that is strongly refuted by Thailand.

Experts and NGOs point out that the WTO's TRIPS agreement does not restrict the use of compulsory licenses to drugs for AIDS or for that matter to any disease. The WTO's Doha Declaration on TRIPS and Public Health also made clear that TRIPS does not restrict the scope of diseases for which compulsory licensing can be used.

Moreover, the TRIPS agreement does not oblige governments or generic companies to have prior negotiations with the patent holders, if the compulsory license is for drugs to be used for public, non-commercial purposes (often referred to as "government use").

Even so, the Thai Ministry of Health engaged with the patent holder of anti-cancer drugs in more than 12 rounds of negotiations for more than 2 months, before deciding to issue the compulsory licences, according to a February 2008 "White Paper" issued by the Ministry of Public Health and the National Health Security Office


The paper provides interesting details of Thailand's compulsory license system and the negotiations that led to the end-January measures.

It said that negotiations with the patent holders were "not successful to the point of fulfilling the conditions that allow the National Health Insurance Schemes to provide universal access" to the anti-cancer drugs "without undue financial burden". Also, the "administrative burdens from the conditions proposed by the patent owners were also very problematic".

The paper refers to a report of an Expert Group of representatives from international organizations (including WHO, WTO, and UNDP) which were invited to Thailand to analyse Thailand's compulsory licensing system and provide technical guidance for a better and more transparent process.

The Health Ministry paper stressed that the Experts' report does not describe any non-transparency of the processes used by Thailand in implementing the government use of patents.

The paper said that Thailand had actually implemented all the necessary steps suggested in the report. Some actions, like the prior negotiation, were more than what the report suggested.

The paper states that Section 51 of the Thai's Patent Act defines the right of the Minister, Permanent Secretary and Director-General of any ministry, bureau or department of the Government to issue a compulsory license in order to carry out services for public consumption, and in case of urgency, e. g., to increase access to essential medicines for the Thai people.

Thus it is not possible for anyone to announce or commit to any person or country that Thailand will not implement the Government Use of Patents on pharmaceutical patents in any circumstances, said the paper, adding: "Doing so is deemed to be a neglect of duty or failure to exercise the rights established by the law to safeguard public interest and public health, and can incur a criminal charge.

"There is no country or government in the world that would renounce its rights to implement a Government Use of Patents on any drug patent. On the contrary, developed countries grant more compulsory licenses than developing countries."

Cancer (particularly lung and breast cancer) is a major health problem for Thailand, causing more than 30,000 deaths annually and with more than 100,000 new cases reported each year.

According to the Ministry paper, most of the new anti-cancer drugs are patented, costly, inaccessible to the middle class as well as the poor in Thailand.

They are also not included in the National List of Essential Drugs (NLED) due to their high price, nor are they covered by the National Health Insurance system and so patients who try to pay their expenses out of pocket soon bankrupt their family, or stop taking the drugs due to financial constraint.

These problems prompted the National Health Security Board to find ways to provide universal access to essential medicines without any financial barrier, said the paper.

Thus, the Sub-committee on Selecting the Essential Drugs with Access Problems under the National Health Insurance schemes proposed to the Public Health Minister in September 2007 to implement appropriate measures to increase access to these drugs.

The Minister then requested the opinion of the Committee to Support the Implementation of the Government Use of Patents. In October 2007, the committee proposed the implementation of the Government Use of Patents on the four anti-cancer drugs.

The only reason for this is to allow universal access to essential medicines by all the beneficiaries of publicly-financed schemes under the National Health Security System. This is the goal of the previous as well as the new Thai Constitution of 2005, and the National Health Security Act of 2002.

The paper adds that despite the fact that the Minister could immediately endorse the implementation of the Government Use of Patents on the four drugs, he requested that the "Committee to Negotiate for the Price of Essential Patented Drugs" move on with the negotiation.

More than twelve rounds of negotiation took place over two months, with limited progress, which led to the final decision to implement the Government Use of Patents on the four drugs, said the paper.

It added that the cost of 80 mg injection of the patented drug Docetexel (trade name Taxotere) used to combat lung and breast cancer is 25,000 Baht, while the generic equivalent was originally offered to Thailand for 4,000 Baht, or six times cheaper.

The patent holder made several initial offers but there were impractical conditions attached. The company's final proposal on December 20, 2007 was to provide a donation of twice the amount purchased with conditions that the drug had to be put into the National List of Essential Drugs and there had to be a minimum amount of annual purchase. The price offered was also too high, especially since the cost of the generic drug (in a later offer) was only 4.7 % of the original product's price.

Letrozole (trade name Femara), used to combat breast cancer, is priced by the patent holder Novartis at 230 Baht for one tablet of 2.5 mg, while the price of the generic drugs are 6-7 Baht, representing a price differential of 30 times, according to the paper.

Novartis also provided several proposals. In its last proposal, Novartis said it would donate an equal amount to the drugs purchased, on condition that purchases would be at least 60,000 boxes per year. Nevertheless, the price proposed was still higher than the price that the National Cancer Institute receives, as well as the price of generics.

The patented drug Erlotinib (trade name Tarceva) used against lung cancer is priced at 2,750 Baht for one tablet of 150 mg, while the generic drug costs only 735 Baht i. e. 4 times less.

According to the MOH paper, Roche was invited five times to negotiate but only agreed to one meeting. It proposed to reduce the price to 30%, with the condition that the drug had to be put into the National List of Essential Drugs and made reimbursable by all schemes of the National Public Health Insurance.

The patented drug Imatinib (trade name Glivec) used to combat Chronic Myeloid Leukemia and Gastrointestinal Stromal Tumour (GIST) is available at 917 Baht per 100 mg tablet, while the generic is available for only 50-70 Baht, i. e. a difference of almost 20 times.

Novartis made several proposals. It initially offered to pay for the last 9 months of treatment, with the government paying for the first three months in a year. The condition was that the Glivec International Patient Access Program (GIPAP) would be abolished in Thailand, which was unacceptable to the government.

Novartis' second proposal was that it would allow all patients under the Universal Health Insurance Scheme to apply for assistance under the GIPAP, under the condition that the patient is uninsured and that his household annual income does not exceed a certain level. However, the government rejected this condition as it would have put 10 million people out of the GIPAP system.

On January 4, the former Health Minister signed 4 compulsory license notifications but decided to defer the implementation of the notifications, in favour of further negotiation.

Progress was made with Novartis, while the other patent holders did not propose new offers. In view of this and reductions in prices by generic companies, the former Minister endorsed the implementation of the compulsory licenses.

Novartis confirmed on January 23, 2008 that it would allow all patients under the universal health insurance scheme, whose household income is less than 1.7 million Baht per year and who need 400 mg of Imatinib per day (or whose income is less than 2.2 million Baht per year and need 600 mg of Imatinib per day) to have free access to Imatinib, if indicated by the attending physicians.

This condition essentially put all the patients under the universal health coverage scheme into the GIPAP system and thus it was felt that there was no further need to implement the government use of patents on this drug.

However, to ensure continuity and sustainability of this commitment from Novartis, a new draft of the Ministerial Notification to implement the Government Use of Patent on Imatinib on the condition that the GIPAP fails or is terminated was proposed to the Minister, states the MOH Paper.

On Thailand's system to implement compulsory licenses, the paper revealed that the decision for government use of patents has to go through three participatory mechanisms, or committee/sub-committee which were created to ensure "transparency, participation, and to generate systematic and constructive approaches".

The Health Ministry has also set up a joint committee of officials from the Ministry and the drug industry to provide recommendations for the sustainable development of the healthcare system.

The Thai Health Ministry's white paper shows that the authorities that carried out the compulsory licensing exercise had a sophisticated system of determining whether to issue compulsory licenses and for which drugs, of negotiating with patent holders, and of estimating the gains and losses regarding whether to maintain the purchase of branded patented products or buying alternative generic drugs.

It was also steered in its decisions by the task, mandated by the Constitution, of providing universal health care for the public. +