E-DRUG: Price Cut Handcuffs: Thailand must stand up to Merck
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Price-Cut Handcuffs: Thailand must stand up to Merck and implement its
compulsory license on efavirenz.
Brook K. Baker, Health GAP
December 3, 2006
On November 29, the Thailand Department of Disease Control, Ministry of
Health, announced that it had issued a compulsory license for Efavirenz
that would allow immediate importation at half the cost from India and
subsequent local production by GPO. The compulsory license would be
effective through December 31, 2011 and would allow treatment of up to
200,000 Thais. A modest royalty of .5% would be payable to the patent
holder, Merck. This license is the result of years of advocacy by Thai
activists, including TNP+, and other NGOs trying to convince Thai officials
to secure more affordable and diverse sources of life-saving medicines.
Within two days, Merck leapt to the defense of its patent by offering to
discuss discount prices or voluntary licenses with the Government
Pharmaceuticals Organization. In doing so, Merck complained that it had
received no prior warning's of the government's intention and further
claimed that there had "been no process in terms of Thai law or
international law, where the company has been consulted or where the
company has been asked what they [sic] could do to assist."
To the contrary, neither Thai law nor international law requires prior
negotiation for a voluntary license or for price discounts before issuing a
compulsory license for government, non-commercial use (commonly called
government or crown use) or for a health emergency such as that presented
by HIV/AIDS. Article 31 of the TRIPS Agreement specifically authorizes
government use without negotiation, and the 2001 Doha Declaration on the
TRIPS Agreement and Public Health confirms this procedure. There's no way
that Merck officials don't understand the legality of Thailand's stated
intentions, but that doesn't stop Merck's disinformation team from
suggesting that Merck has been treated unfairly and perhaps even illegally.
The U.S. and its drug companies have a long history of trying to prevent
issuance of compulsory licenses by developing countries. The infamous
1998-2001 Big Pharma lawsuit in South Africa, the 2001 U.S. WTO complaint
against Brazil, and routine drug company and Congressional threats against
Brazil when it has threatened to issue compulsory licenses are only the tip
of the trade-threats iceberg. The US Ambassador had written to the Thai
government in 1999 that "the Thai government certainly don't want to be the
cause of a trade dispute, which is what we have always told them would
happen if compulsary [sick] licensing clause should be invoked." The
Ambassador continued that this would set "a worrisome precedent for the
rest of the drug industry."
Well, the U.S. government "always" resisted compulsory licenses, pre-Doha,
and it continues to do so now with backroom pressure and threats including
those routinely presented in its Section 301 Trade Reports where it has in
the past complained about Brazil's threatened issuance of compulsory
licenses.
Brazil actually represents a cautionary tale because it has cried wolf
three times by threatening to issue compulsory licenses for key,
second-line antiretrovirals. However, each time, the government has
inexplicably backed down and accepted temporary price discounts that were
inferior to prices that could have been obtained through local production
or importation from India. Rather than set a leading-developing-country
example that could catalyze more widespread compulsory licensing throughout
the Global South, Brazil set a negative example of caving into U.S.
pressure.
Thailand must resist Merck's price-cut/hands/cuff offer, an offer that
might bring temporary price discounts, but at the cost of yet again
disincentivizing generic production and yet again demotivating developing
country utilization of a key TRIPS flexibility. In fact, Thailand must go
further and ensure that the compulsory license it issues here includes a
direct right to reference Merck's registration data or a right to otherwise
rely on the fact of registration to establish the safety and efficacy of
generic equivalents. In this regard, it is important to re-establish the
principle that the issuance of a compulsory license or government use order
implicitly permits registration of the licensed product as well. (The U.S.
is attempting to undermine this principal in its free trade agreement
negotiations with Thailand where an absolutist form of five-year data
exclusivity and registration/patent linkage might undermine the right to
obtain marketing approval for a drug produced pursuant to a compulsory
license; simultaneously, the U.S. is also attempting to restrict the
grounds upon which licenses can be granted.)
It is no secret to Merck that its supply chain in Thailand has been
erratic, threatening patient safety, nor that it has been charging prices
nearly double those available from WHO-prequalified generic competitors.
If Merck could figure out how to file a lawsuit, it would, like its
bedfellows Pfizer and Novartis have done in the Philippines and in India
(challenging government action allowing early registration and strict
definitions of pharmaceutical patentability respectively). Since Merck
can't find even minimally plausible grounds for a lawsuit, it will instead
seek to mislead the public that it is the wronged party and then try to get
its USTR and Congressional bullyboys to apply pressure on the post-coup
Thai government. Hopefully even a military government will see that the
future health of tens of thousands of PWAs in Thailand is dependent on
competitive sources of low-cost generic medicines of assured quality,
whether imported or produced locally.
Brook Baker
B.Baker@neu.edu