BANGKOK. By standing up to pressure from big pharmaceutical companies over cheap anti-AIDS drugs, Thailand may have created an opening in global trade rules that will permit developing countries to more readily break patents in times of public health emergencies.

The fact that the United States government has clarified that Bangkok had not violated any laws under the special provisions of the Trade-Related aspects of Intellectual Property (TRIPS) of the World Trade Organisation (WTO) is significant.

Last week, the U.S. Trade Representative's office (USTR) placed Thailand on a watch list of countries that had, in general, violated intellectual property rights. Thailand first broke the patent on the anti-retroviral (ARV) drug ‘Efavirenz' produced by U.S. pharmaceutical company Merck Sharp and Dohme last November, and went on to do the same with ‘Kaletra', another anti-HIV/AIDS drug from U.S. pharma major Abbott Laboratories as well as ‘Plavis', a blood-thinner made by Sanofi-Aventis, in January.

Noticeably, there was lack of precision in the USTR annual report on intellectual property protection regarding the Thai move to issue a compulsory license (CL) early this year to secure cheaper alternatives for Kaletra, the drug marketed by Abbott, from India.
''While the U.S. acknowledges a country's ability to issue such licences in accordance with WTO rules, the lack of transparency and due process exhibited in Thailand represents a serious concern,'' states the report.

Far more strident in its criticism to scuttle Bangkok's efforts is the language on a pro-pharmaceutical website launched Monday to campaign against Thailand's pro-poor public health policies. ‘'Thailand's actions violate the TRIPS agreement of the WTO,'' states the website, www.Thailies.com. ‘'WTO members are not allowed to issue compulsory licenses without full and transparent negotiations.''

Since then the advantage secured by Thailand in testing -- and winning -- the right to use CLs has earned it praise from a broad section of activists, HIV patients and academics at home and abroad. ‘'Other countries will feel more confident in issuing CLs, rather than threatening to issue them but not doing so due to pressure,'' says Paul Cawthorne of Medecins Sans Frontieres (MSF), the international humanitarian agency, in an interview.

‘'This can set a precedent, a new understanding, about what developing countries can do under TRIPS,'' adds Jacques-chai Chomthongdi, a researcher at Focus on the Global South, a Bangkok-based think tank. ‘'This is to the advantage of developing countries.''
In fact, the U.S. could not fault Thailand for violating trade rules since Bangkok's policies are compliant with TRIPS, he explained to IPS. ‘'Thailand has acted within local and WTO laws.''

Washington's fuzzy, ambiguous language towards Thailand for invoking a CL stands in contrast with the tough stance taken previously to defend brand-name drugs of pharmaceutical corporations when threatened by the special provisions under TRIPS, which permit a developing country to produce or import generics. These provisions in global free trade, permitting developing countries to break patents in times of a national health crisis, were approved during the WTO ministerial meeting in Doha, in 2001.

By the weekend, Thai activists were celebrating the possible ripple effect across the developing world in the wake of Bangkok's quest for cheaper generic drugs. Brazilian President Luiz Inacio Lula da Silva signed a decree Friday in Brasilia to issue a CL for ‘Efavirenz'.

The emergence of such a South-South alliance to bring down the prices of life-prolonging drugs through CLs was no surprise for Thai activists like Kannikar Kijtiwatchakul of Free Trade Agreement Watch, a non-governmental organisation campaigning against global corporate agendas. ‘'Brazil learnt from us. They asked Thailand what it did to issue a compulsory license,'' she told IPS.

‘'Thailand has been an inspiration and an example for us all on this matter,'' wrote a public health official in the Brazilian government in a letter to officials at Thailand's public health ministry in early March. At that time, Bangkok was in the glare of international attention for taking the side of people's lives over corporate profits.

‘'It is time to unite all those who have always defended the use of TRIPS flexibilities, which can be invoked in the name of protecting public health, as in the case of compulsory licenses,'' added the Working Group on Intellectual Property from the Brazilian Network for the Integration of Peoples in a late-April e-mail to Thai activists.
Thailand's clash with Abbott, which began in January following the government's issuing of a CL for ‘Kaletra' , intensified in March when Abbott retaliated by refusing to register seven new drugs in the South-east Asian country. It meant depriving Thais of a new ARV, Aluvia, which is conducive and can be easily stored in tropical climates, an antibiotic, a painkiller and drugs for kidney disease and blood clots.

By early April, faced with growing criticism and Thai reluctance to cave into pressure, Abbott agreed to supply both ARVs to Thailand at a reduced price of 1,000 US dollars for a year's dosage per patient. In exchange, the pharma giant wanted the CL for Kaletra dropped.

The Thai public health officials out to capitalise on the frequently debated WTO rule are in step with an impressive record the country has maintained in caring for its citizens with HIV/AIDS and reduce the spread of the killer disease. Currently, some 90 percent of people who need ARVs are treated through a universal health care scheme. The country has over 600,000 people infected with HIV and has recorded 300,000 deaths due to AIDS.

‘'All CLs have done is to open up a monopolistic market to competition,'' says Cawthorn of MSF. ‘'Why should the pharmaceutical companies be worried about that?''

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The battle for cheap Aids drugs

David Batty looks at the clash between pharmaceutical firms and developing countries over the right to produce affordable HIV medicines

Wednesday May 9, 2007
Guardian Unlimited

In the past five years, developing countries and pharmaceutical companies have come into conflict over the huge costs of providing drug treatment to rising numbers of people living with HIV/Aids.

Since 2002, 12 countries in Africa and Asia have broken Aids drug patents and either produced their own generic versions of the drugs or bought them from generic drug manufacturers, according to the aid agency Oxfam.

The two latest countries to take this step - known as compulsory licensing - are Brazil and Thailand, both of which say it is the only way for them to maintain their policy of providing free Aids treatment to all sufferers.

Dr Tom Melman, the HIV adviser at aid agency Médecins Sans Frontieres (MSF), said: "The threat of compulsory licenses has been used by developing countries to try to get pharmaceutical companies to negotiate lower prices. It's deplorable that it's necessary but we applaud the decision to take this step."

While the move has provoked protest from the pharmaceutical industry, both countries claim they are acting within international law. According to World Trade Organisation agreements, governments can issue compulsory drug licenses for non-commercial use in their countries, allowing the manufacture, import and sale of cheaper generic versions of patented drugs in case of a national public health emergency.

The cost of Aids medication for developing countries is rising as more and more patients develop resistance to first-line anti-retroviral drug treatments. Second-line drugs - used when patients develop resistance - can cost 10 to 15 times more than first-line drugs, according to MSF.

Around 39.5 million people worldwide are living with HIV/Aids, according to the World Health Organisation. Of those, 4.3 million were infected in 2006 - 400,000 more than in 2004.

The growing need for these drugs threatens to bankrupt the health departments of many developing countries. Brazil's health ministry estimates that more than 80% of its $445m (£223m) budget will be spent on imported drugs, with half spent on just three medicines - tenofovir, efavirenz and Kaletra.

President Luiz Inacio Lula da Silva of Brazil said the country would now import a cheaper, generic version of efavirenz from India rather than buying the drug from the US pharmaceutical giant, Merck.

Brazil has repeatedly used the threat of compulsory licensing as a bargaining chip to reduce the price of Aids drugs. Merck had offered Brazil a 30% discount to buy the pills at $1.10 (55p) each, but the country will now source the Indian-made version for just 45 cents each.

With around 75,000 Brazilians using efavirenz, out of a total of 180,000 people who receive free anti-retroviral drugs, the deal represents a huge saving for the government.

Meanwhile, a report last August by the World Bank on the Thai government's Aids treatment programme predicted that compulsory licensing would reduce the cost of second-line drug treatments by 90%, saving the country $3.2bn over 20 years.

Brazil and Thailand received a boost yesterday when the charitable foundation of former US president Bill Clinton announced it had struck a deal with two Indian drug companies to provide cheap generic first and second-line drug treatments to 66 developing countries.

Rohit Malpani, the trade policy adviser for Oxfam US, said the Clinton Foundation's willingness to buy the generic drugs from the Indian manufacturers Cipla and Matrix would give developing countries greater leverage in bargaining with American pharmaceutical companies for lower prices on branded drugs.

But Mr Malpani said developing countries could still face the threat of US trade sanctions and retaliation from drug companies. Earlier this year, Abbott Laboratories, based in Illinois, halted plans to introduce new drugs, including those for Aids, in Thailand in a bid to force the Thai government to reverse its decision to ignore the patent on Kaletra.

The US government has previously put pressure on developing countries through its trade representatives, political lobbying and attempts to tie them into free-trade agreements that undermine compulsory licensing.

But Mr Malpani believes such action will decline in the wake of the US congressional elections. He said: "Since the elections, there isn't a majority who support stricter and stricter intellectual property protection."

The bigger threat to the availability of cheap drugs could come from the tightening of drug laws in India. Two years ago, India became a full member of the World Trade Organisation, meaning it must respect pharmaceutical patents.

Mr Malpani said: "India can still produce generic versions of brand drugs. But it now has to justify why it wants to break a patent, or not grant one, on a case-by-case basis."