Thailand’s Bittersweet Victory over Big Pharma
|Our Correspondent||Apr 13, 2007|
India, Pakistan, Brazil,
China, Indonesia, Ukraine
and governments from nearly 40 other countries can all thank Thailand government
for cheaper prices of Abbott Laboratories’ anti-AIDS drugs Kaletra and Aluvia.
The US-based pharmaceutical company announced Wednesday it
would slash the price of the second-line antiretrovirals for 45 low and
middle-income countries to $1,000-per-patient per year from $2,200 previously.
The agreement, brokered after World Health Organization
(WHO) Director-General Margaret Chan recently approached Abbott, appears at
first glance to signal a victory for Thailand
in its ongoing dispute with the company over its drug prices but in fact Thailand is
paying a price for its action.
The row started in January when Thailand announced it would issue a
compulsory license for Kaletra, as it had previously done with other
antiretrovirals and the heart disease drug Plavix. Abbott quickly responded by
pulling registrations for seven new drugs in Thailand, including Aluvia, a
heat-stable form of Kaletra that eliminates the need for refrigeration —
crucial for AIDS patients in a warm weather climate.
But although Thai patients will be able to receive Kaletra
at the new $1,000 price, Abbott is still singling Thailand out by refusing to
register Aluvia in the country, which means Thai patients can’t access the drug
at all. By doing so, Abbott is punishing Thailand for exercising its rights
under the World Trade Organization's agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS), while some 44 other middle-income
countries reap the benefits of its bold moves.
“It’s not just that Thailand threatened to issue compulsory
licenses, but it actually went ahead and signed them,” said Paul Cawthorne, the
head of mission for Medecins Sans Frontieres (MSF) in Bangkok. “Brazil
threatened a compulsory license and received a price reduction for itself. Thailand issued
a compulsory license and got a worldwide price reduction. Certainly it was a PR
disaster when Abbott said it would pull its drugs from Thailand, and
now they are trying to scrape themselves back. Other countries around the world
should be thankful to Thailand,
even though Thailand
is still suffering.”
Abbott has developed a reputation over the years as one of
the toughest negotiators on HIV/AIDS drugs. In 2004, the Chicago-based company
stunned AIDS patients around the globe — and some of its own shareholders —
when it said it would raise the price of the antiretroviral Norvir by 400
Abbott said the move was necessary because it had
under-priced the drug for years, but the Wall Street Journal reported earlier
this year that the price spike was done to increase the price of two rival
drugs taken in conjunction with Norvir, which would result in more sales of its
own Kaletra. Internal company documents warned the move would make Abbott look
like a “big, bad, greedy pharmaceutical company,” according to the Journal, but
Abbott executives reportedly thought the profits gained would outweigh any
The price increase is now the subject of an anti-trust
lawsuit in US
federal court. The Democrat-controlled House of Representatives also may open
hearings on whether Abbott artificially inflated Norvir’s price, The Hill, a
Washington DC-based newspaper, reported last month.
For Kaletra, Abbott said in a statement this week, that it
lowered the price “to further increase access and address the debate around
pricing of HIV medicines: by increasing affordability while preserving the
system that enables the discovery of new medicines.”
will not get Aluvia or other new drugs, however, because “the Thai action does
not support long-term research and development,” Melissa Brotz, an Abbott
spokeswoman, said in an interview.
“The developing world pays a significant amount for
innovation and middle-income countries will have to pay some share,” she said.
“Our position is that nations need to pay their share of innovation costs. If
10 or 15 years ago people didn’t respect patents, these drugs wouldn’t be
Brotz also flatly denied that Abbott’s move to reduce the
price of Kaletra in 45 countries was related to Thailand’s decision to issue a
compulsory license for the drug, despite the conspicuous timing and increased
calls for renewed boycotts of Abbott products. Two years ago, Abbott offered Brazil a
discount on Kaletra after it threatened to use a compulsory license, but the
price was not disclosed.
“This is not in response to Thailand,” she said. “We are always
evaluating pricing with regards to changes in the environment.”
Perhaps most importantly, Brotz declined to comment when
asked if Thailand’s
move to issue a compulsory license for Kaletra was legal under the WTO’s TRIPS
agreement. “I don’t think we’re going to comment on TRIPS,” she said.
recent moves to issue a compulsory license for Kaletra and other drugs — like
Merck’s antiretroviral Efavirenz and Plavix, a blood-thinning drug marketed by US
company Bristol-Myers Squibb — are completely legal under TRIPS.
The agreement clearly says countries have the right to issue
compulsory licenses in cases of national emergency, extreme urgency, or public
non-commercial use. The WHO’s Chan, who brokered the deal with Abbott, even
wrote the Thai government in January to say its decision to issue compulsory
licenses was “fully in line with the TRIPS agreement.”
Moreover, the World Bank stated in a report last August that
should resist pressure from Big Pharma and use compulsory licenses to help
bring down its drug costs.
“Because the drugs used in second-line therapy are patented,
produced, and sold by multinational pharmaceutical corporations, Thailand must
either pay the high prices demanded by those monopolies or exercise its rights
under World Trade Organization (WTO) treaties to grant a compulsory license for
the manufacture of the drug, subject to negotiated royalties,” the report said.
It adds: “Because Thailand
stands to gain a great deal from bilateral agreements to reduce trade barriers
with trading partners such as the United States, the Royal Thai
government may be tempted to relinquish its rights to grant compulsory licenses
for AIDS drugs in exchange for proffered trade advantages. The report finds
that the cost of such concessions would be large.”
The World Bank said Thailand could cut the costs of
second-line HIV/AIDS therapy by 90 percent, or $3.2 billion, through 2025 by
issuing compulsory licenses.
Although the September coup has indefinitely stalled
bilateral trade talks with the US,
Abbott’s moves to pull some drugs demonstrates the ramifications of actually
seeking to implement the protections offered by the WHO. Abbott is quick to
accuse Thailand of
disregarding the patent system, but it refuses to acknowledge that the
government’s actions are perfectly consistent with a multilateral agreement
dealing with intellectual property rights that was signed by the United States
and every other WTO member.
The WHO is similarly ambiguous on the matter. When asked if
the WHO supported Abbott’s move to withdraw Aluvia from Thailand, spokeswoman
Christine McNab referenced a portion of Abbott’s press release, which states:
“Specifically, with regard to Thailand, Abbott appreciates and fully respects
the suggestion of Director-General Chan that more work needs to be done with
the government of Thailand to achieve a positive outcome.”
“The issue is now one for Abbott and Thailand to
work through the details,” she added.
Maybe Abbott will come around and register the drug in Thailand, but
it’s unclear what incentive it will have to do so. It took the international
pressure off its back by lowering drug prices in many countries that would
normally be sympathetic towards Thailand’s
plight, and even received a stamp of approval from the WHO. If Aluvia is not
offered in Thailand, the WHO-brokered deal with Abbott will also have the
effect of deterring countries in the future from following the TRIPS agreement
and issuing compulsory licenses for essential drugs.
Though Abbott’s strategy may be to isolate Thailand by
providing 44 other middle-income countries with much cheaper Aluvia, the
dispute itself affects every country. For if Thailand is punished simply for
doing what the TRIPS agreement says is legal, then essentially those
multilateral deals are nothing more than meaningless pieces of paper, and the
debate over intellectual property rights moves back to square one.
“This case shows that if a country tries to use the TRIPS
agreement then they will be really hit hard by the pharmaceutical industry,”
said MSF’s Cawthorne. “It brings into question whether the whole thing is dead
in the water.”