Thailand’s cheap AIDS drugs under review

Vorsang, a 30-year-old AIDS patient who works at the Mercy Center in Bangkok’s Klong Toey slum, sees the benefits of Thailand’s groundbreaking decision to issue compulsory licenses for AIDS drugs every day.

She makes routine house visits to abandoned mothers, their kids and orphans who are infected with the virus. For them, the licenses removed the daily stress of worrying about paying for AIDS drugs.

“If one person has AIDS, the whole family suffers,” she said. “To pay for the drugs everyone must struggle and work very hard; it has a ripple effect throughout the community.”

Compulsory copyright licenses are anathema to the world’s pharmaceutical copyright holders because they are a unilateral exception that allows another party to copy the copyrighted item without permission, although the licensee must pay a fee. Last year Thailand issued such licenses for two AIDS drugs, Merck’s Stocrin (efavirenz) and Abbott Laboratories’ Kaletra (lopinavir/ritonavir), and heart disease drug Plavix — all of which are now offered for free in the government’s universal health care scheme. The minister who imposed the compulsory licenses, Mongkol Na Songkhla, was considering issuing more for three cancer drugs before he was replaced in January after the People Power Party’s election win.

New Health Minister Chaiya Sasomsap now threatens to reverse those policies, ordering a review of all compulsory licenses. He claimed that the adverse impact “on pharmaceutical firms and big countries” would “put Thailand in trouble.”

Those words must have pleased Big Pharma, which has worked tirelessly to denigrate Thailand over the past year. But actually they hold little water. Thailand appears ready to keep the current compulsory licenses in place, even if they stop issuing any new ones.

Instead of looking to halt compulsory licenses, the new health minister would be wise to come up with a comprehensive health plan and start cleaning up the state-run Government Pharmaceutical Organization to deflect legitimate criticisms from the pharmaceutical lobby.

CLs have strong support in Thailand

For one, a decision to withdraw compulsory licenses would be politically unpopular. Two years ago, strict rules on compulsory licensing and drug patents proved a key sticking point in a free-trade agreement between Thailand and the US. At that time, Thaksin Shinawatra’s government wouldn’t succumb to US demands on intellectual property rights out of fear they would spark mass protests. This was done even though Thailand wanted to remain a key exporter to the world’s largest economy.

Vorsang’s story and the thousands like it are a big reason for this. Currently Vorsang takes efavirenz, a drug she wouldn’t be able to afford without the compulsory license. Her two kids, who also have AIDS, take Kaletra.

Vorsang receives efavirenz for free in the government’s universal health care package. Her kids also receive Kaletra for free under a special Red Cross program.

However, if Chaiya revokes the compulsory licenses, the government would drop efavirenz from its health plan. Vorsang would then need to pay 1,400 baht (US$42.42*) per month because she has a work card through the Mercy Center.

Vorsang’s kids — six-year-old Oat and seven-year-old Arm — will graduate from the Red Cross program in two years. If Chaiya lifts the compulsory license on Kaletra, Vorsang would need to come up with at least 10,000 baht a month for each child, or about 21,400 baht for her family’s drug expenses each month — three to four times her monthly salary.

“With the CL, everything is free,” she says. “But without it I cannot afford it.”

Vorsang and her kids are blessed, however, as the Mercy Center and other aid groups like Medicins Sans Frontiere are working to give her and many others the support she needs to buy the drugs if the compulsory licenses are revoked. But the high costs mean some patients aren’t so fortunate.

“We try to help as many people as we can, but without the CLs we cannot help everyone,” said Phongvicha, 40, another worker at the Mercy Centre who has HIV.

“Before the CLs I had friends who stopped taking the medication because they could not afford it. Now they are dead,” he said. “That wouldn’t need to happen with the CLs.”

US political winds are shifting

Secondly, it’s highly unlikely that Thailand’s compulsory licenses would lead to trade sanctions from the US. Due to timing more than anything, the Generalized System of Preferences (GSP) privileges of certain Thai products were revoked last year after the US downgraded Thailand to the so-called “Priority Watch List” in its annual 301 report on countries that abuse intellectual property rights. The poor wording of the report, combined with trade representative’s reluctance to answer questions about whether the move was a response to the compulsory licenses, indicated that the administration of President George W. Bush was tipping its hat to the pharmaceutical companies.

Even so, the Priority Watch List contains no mandatory trade sanctions, and the GSP privileges were revoked because those products graduated from the program according to a very specific formula. Now, with the 301 report again set to come out in April, some Thai business groups are claiming the pharmaceutical lobby wants Thailand downgraded to its worst possible rating, known as “Priority Foreign Countries.” This designation also contains no automatic trade sanctions, but opens up Thailand for an investigation that could lead to the loss of trade benefits.

This is highly unlikely. Currently no countries are on the list, including China — by far the most egregious violator of intellectual property rights. “Thailand practically has to be burning DVDs in the basement of Government House to get on the Priority Foreign Country list,” said a source familiar with the report. “The movie and entertainment industries want to keep Thailand on the Priority Watch List. Pharma is out there by themselves on this.”

Thirdly, US policy will likely change drastically when Bush leaves office. During his tenure many saw the plethora of bilateral FTAs as largely driven by the pharmaceutical industry’s attempts to lock in countries to restrictions that go beyond the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property, commonly known as TRIPS. The pharmaceutical companies see TRIPS as too vague, allowing countries like Thailand legally issue compulsory licenses under the “government use” provision.

None of the three leading candidates to replace Bush are fans of Big Pharma. The democratic challengers, Hillary Clinton and Barack Obama, both favor universal health care and often rail against pharmaceutical companies.

“Pharmaceutical companies are selling the exact same drugs in Europe and Canada but charging Americans more than double the price,” says the website of Obama, who is now leading Clinton in the race to be the Democratic nominee. Obama would allow Americans to buy medicine from other developed countries if they are safe, and he would repeal a law that bans the government from negotiating with drug companies, which could result in savings as high as $30 billion.

Hillary Clinton’s husband, former President Bill Clinton, has already supported Thailand’s efforts and sought to reduce the price of AIDS drugs in countries around the world. “No company will live or die because of high price premiums for AIDS drugs in middle-income countries, but patients may,” he said after Thailand took heat for its compulsory licenses.

Even John McCain, the presumptive Republican nominee, has gone against much of his party in fighting Big Pharma. He also wants the government to negotiate drug prices with drug companies and import cheaper drugs from Canada. As a candidate, he has called himself one of the “great enemies of the pharmaceutical companies in Washington.”

GPO still short of WHO standards

Given this, it’s hard to imagine that Chaiya would upset America too much if he kept the compulsory licenses in place.

Nonetheless, he could start pushing for a more comprehensive look at health care in Thailand. This would include pushing for more spending on public health and making the state-run Government Pharmaceutical Organization (GPO) more transparent.

The GPO’s current factory does not meet World Health Organization standards. After a delay of nearly five years, mostly due to alleged corruption, the GPO has now started construction of a new factory that does meet WHO requirements.

“We already got a contractor to build a new factory, and we expect it to be finished within this year,” said Achara Eksaengsri, deputy director of research and development at the GPO. “But we will need some more time to order machines in the factory, and it should be operational next year.”

Despite this, the GPO plans to start producing generic versions of patented drugs in a few months. This is a curious move, since last year Mongkol said the GPO would not produce generic drugs in Thailand until the new factory was completed.

By importing generic AIDS drugs from WHO-approved factories in India, Thailand is eligible to use money from the Global Fund for Aids, Tuberculosis and Malaria to pay for them. It would have to foot the bill itself if it starts making them in the GPO, undermining claims that the CLs would save money.

“The current GPO factory is not approved by the WHO, but it is approved by the Thai Food and Drug Administration,” Achara said, disputing claims that the drugs are below quality.

She claimed that local production is necessary for Thailand to manage supply. But it’s hard to see why the country couldn’t wait another year to start local production, particularly as it decided to urgently import the drugs last year and still doesn’t have exact figures on demand.

The government claims that 30,000 patients need efavirenz, and it has imported several batches of the drug already. Achara said the original price was 1,200 baht per month per patient. Merck offered to lower the price to 750 baht per month per patient, but the government opted to import the drug from India for 650 baht.

For Kaletra, the government plans to import 4,000 bottles next month, with each patient needing one bottle per month. About 1,000 patients now need the drug, Achara said, although she expects that number to climb once the drug is more readily available.

Kaletra originally cost about 10,000 baht per patient per month, she said, but Abbott offered to lower the price to about 4,000 baht. The government chose instead to issue the compulsory license and pay the generic cost of about 2,000 baht.

For Plavix, the GPO plans to import two million tablets from India next month. These will be disbursed through public hospitals, although the government does not have precise figures on how many patients need the drug because it was never offered before.

Plavix originally cost the government about 60 baht per pill, and patent holder Sanofi Aventis offered to lower the price to 20 baht after the government threatened a compulsory license. But the government rejected the offer and issued a compulsory license, allowing it to buy the drug for two baht a pill.

Achara knows the GPO will become a target for Big Pharma, but she insisted that it wants to make the drugs only to control supply. It will not profit from them, she said.

“We cannot make a profit because we know that if we have multinational corporations sue us, we will have to go to court and disclose all our accounts,” she said.

In addition, she said, it’s impossible to quantify the dollars saved by the compulsory license policy, as without it the government wouldn’t even consider buying expensive drugs.

“If the drug prices are too high, then nobody in the government would support buying them anyway,” she said. “The result is that the patients would have nothing.”

*Correction. The amount was misstated originally.