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[e-drug] Bulletin: Thailand Lowers Medicine Prices; Faces U.S./E.U. Pressure

  • From: "Sarah Rimmington" <srimmington@essentialinformation.org>
  • Date: Mon, 14 Apr 2008 16:55:52 -0400

E-DRUG: Bulletin: Thailand Lowers Medicine Prices; Faces U.S./E.U. Pressure

Essential Action's Global Access to Medicines Bulletin
Issue No. 3, April 14, 2008

To subscribe to the Global Access to Medicines e-Bulletin go to:

Special In-Depth Issue:
Thailand Lowers Medicine Prices; Faces U.S./E.U. Pressure

Over the last year and a half, Thailand has shown the way forward to
ensure that artificially high drug prices do not deny medicines to
people who need them.

In November 2006 and January 2007, the country issued three "compulsory
licenses" -- authorizations of generic competition for products that
remain on patent -- for two key, newer AIDS drugs and a heart disease
medicine [1]. In January 2008, it issued an additional four compulsory
licenses on cancer medications.

Legal under national law and international trade rules [2], the
compulsory licenses have led to sharp price reductions, with more to
follow. The lower prices have enabled Thailand to expand the number of
people receiving important drugs. And Thailand's actions have spurred
brand-name companies to lower their prices globally.

Unfortunately, instead of congratulating the country for its public
health leadership, the United States and European Union have pressured
Thailand to rescind the compulsory licenses. And, Thailand's new
government -- elected in late January -- has expressed considerable
unease with the compulsory licenses, agreeing so far to implement the
cancer drug licenses only under pressure from Thai consumer and health

Thai compulsory licenses a breakthrough

Many other developing countries have previously issued compulsory
licenses, including Eritrea, Ghana, Indonesia, Malaysia, Mozambique,
South Africa and Zambia. Brazil issued a compulsory license after the
first round of Thai licenses [3].

Industrialized countries, including the United States, routinely issue
compulsory licenses [4]. In March 2007, Italy issued a compulsory
license on finasteride, the active ingredient in the male-pattern
baldness drug sold by Merck under the brand name Propecia [5].
Brand-name drug companies also frequently seek compulsory licenses.
Roche is presently seeking a compulsory license for the right to an
Amgen-controlled anemia drug, for example [6].

Despite the frequency with which compulsory licenses have been issued,
both public health advocates and Big Pharma viewed the Thai actions as a

First, the government issued licenses on second-generation HIV/AIDS
drugs -- efavirenz (brand name Stocrin, sold by Merck) and
lopinavir/ritonavir (Kaletra, sold by Abbott). These were the first
compulsory licenses on the second generation of AIDS drugs, which remain
much more expensive than the older medicines for which generic
competition is now robust. Second, the licenses were the first issued by
a middle-income country with substantial market size -- large enough to
start the process of reducing the costs on the raw materials markets.
Third, the January 2007 Thai license on clopidogrel (Plavix, sold by
Sanofi-Aventis) signaled a refusal to let compulsory licensing be
confined to AIDS drugs. The licenses in January 2008 covering cancer
drugs further expanded the compulsory licensing initiative outside of
the realm of HIV/AIDS drugs.

Health-driven policy

Thailand issued a very detailed rationale for its compulsory license
policy, including two lengthy white papers [7].

Thailand adopted a universal health system in 2001, under which all
Thais have a right to medicines on the national drug list. Compulsory
licenses would be issued, the government explained, for drugs meeting
important public health objectives, where "the price of these drugs and
medical supplies [is] too high to be affordable by the government to
supply to the beneficiaries of the national health insurance schemes to
achieve the universal access policy."

Regarding AIDS drugs, the government estimated that 50,000 Thais will
need second-line treatment in the near future. The cost of providing
lopinavir/ritonavir at Abbott's price to this population would be more
than the entire current budget for ARVs, according to the government.
The immediate price discounts from the compulsory license would
eventually enable the government to provide an additional 8,000 people
with the medicine, with that number expected to grow as generic costs
fall over time.

The government also maneuvered to preserve meaningful markets for the
companies whose products were compulsory licensed. The compulsory
licenses applied only to the public health system. The brand-name
companies' monopolies still apply in the private sector, which serves
richer Thais and a considerable population of medical tourists who go to
Thailand for cheaper treatment options.

The generic competition introduced by compulsory licenses brings
dramatic price reductions. For clopidogrel, the price has fallen by 98
percent. For the cancer drug compulsory licenses, the government reports:
- The generic price for the lung/breast cancer drug docetexel (Taxotere,
sold by Sanofi-Aventis) is 16 percent of Sanofi-Aventis's price.
- The generic price for the breast cancer drug letrozole (Femara, sold
by Novartis) is 3 percent of the Novartis price.
- Roche's price for the lung cancer drug erlotinib (Tarceva) is roughly
four times the generic price.
- Novartis's price for imatinib (Glivec) is 18 times more expensive than
generic versions. (Novartis agreed to donate supplies of imatinib, and
Thailand is not planning on implementing the imatinib license.)

As of January 2008, Thailand has been able to roughly triple the number
of people receiving the HIV/AIDS drugs efavirenz and
lopinavir/ritonavir, thanks to the lower prices achieved with generic
competition [8].

The price reductions obtained by Thailand have also benefited people in
other developing countries. After Thailand issued its compulsory license
on Kaletra, for example, Abbott lowered its middle-income-country price
from $2,200 a year per person to $1,000 [9].

Big Pharma, U.S., E.U. pressure Thailand to revoke medicines policy

Big Pharma has reacted very negatively to the Thai compulsory licenses.
In a striking move in March 2007, Abbott Laboratories withdrew
applications to market seven new medicines in Thailand. Public health
advocates labeled the withdrawal as an attempt at "blackmail." Médecins
Sans Frontières/ Doctors Without Borders said it was "unethical and
utterly unacceptable [10]."

The U.S. government quickly registered protests with Thailand after the
first compulsory license was announced, but then retreated somewhat in
the face of protests from Members of the U.S. Congress. The U.S. Trade
Representative (USTR) implicitly acknowledged that Thailand's actions
were permissible under the terms of the World Trade Organization's
Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) [11].

In April 2007, however, USTR placed Thailand on the "Priority Watch"
list in the annual Special 301 Report, a listing of countries the United
States claims are engaging in allegedly egregious violations of patent,
copyright and related policies preferred by the United States. Countries
so listed "are the focus of increased bilateral attention concerning the
problem areas," and face the distant threat of trade sanctions if the
United States concludes issues worsen [12].

The United States continues to complain about Thailand's compulsory
licensing policy, although the United States has not imposed any actual
penalties, and almost certainly will not [13].

The European Commission has followed suit, asking that Thailand review
its compulsory licensing policy [14].

Meanwhile, the compulsory licensing policy has been on shaky ground in
Thailand. The compulsory licenses were a hallmark of the Public Health
Minister who served under the military government that ruled Thailand
from September 2006 to January 2008. The new government's Public Health
Minister was openly skeptical of maintaining the cancer drug compulsory
licenses issued by the previous minister in the last month of his
tenure. Health and consumer groups launched a major campaign to defend
the compulsory licenses, and the new minister announced a decision in
March to implement the licenses [15]. They are still subject to review
by the full government, however, and it remains unclear whether they
will ultimately be implemented or not.

For public health campaigners, the Thai compulsory licensing experience
stands as a model of how to use legal tools to expand access to
essential medicines. The Thai case reiterates how generic competition
can lower prices and make expanded access possible. It also illustrates
the benefit of widespread compulsory licensing focusing on a wide range
of diseases.

Web links:
[1] http://www.cptech.org/ip/health/c/thailand/
[2] http://www.wcl.american.edu/pijip/documents/pijip04262007.doc
[3] http://www.cptech.org/ip/health/cl/recent-examples.html and
[4] http://www.essentialaction.org/access/uploads/Weissman.ICCL.rtf and
[5] http://www.agcm.it/agcm_eng/COSTAMPA/E_PRESS.NSF/
[6] http://www.reuters.com/article/marketsNews/idUSN2642636620080326
and http://www.essentialaction.org/access/uploads/2d.Thai.CL.whitepaper.pdf
[11] See
and http://www.cptech.org/ip/health/c/thailand/letter.pdf
[14] http://www.actupparis.org/IMG/pdf/CAB24_0222100119_001.pdf
[15] See http://ipsnews.net/news.asp?idnews=41286 and

Published by Essential Action's Access to Medicines Project
P.O. Box 19405, Washington, DC, 20036, USA
Tel: (1) (202) 387-8030
Editors: Sarah Rimmington srimmington@esssentialinformation.org
Robert Weissman rob@essential.org

To subscribe to the Global Access to Medicines Bulletin go to:

Sarah Rimmington
Essential Action, Access to Medicines Project
Washington, DC
Tel: (202) 387-8030
Cell: (202) 422-2687
E-mail: srimmington@essentialinformation.org