Bangkok - The US government has further confused the debate over Thailand's compulsory licenses for AIDS drugs with vague assertions concerning the legality of the move in its annual report on the global state of intellectual property rights.

With the price of anti-AIDS drugs falling dramatically in Thailand as a result of Bangkok’s action, the US Trade Representative this week elevated Bangkok to its list of worst intellectual property offenders in its 2007 Special 301 Report to reflect “a concern that the past year has been characterized by an overall deterioration in the protection and enforcement of IPR in Thailand.”

The move doesn't directly lead to trade sanctions, but amounts to a “name-and-shame” strategy, according to one diplomat.

Although Thailand has been a haven for pirated music, movies, books and computer software for years, the pharmaceutical industry has loudly fought the government's recent decision to issue compulsory licenses for a number of drugs, including ones that fight AIDS and heart disease. The compulsory license for Kaletra, a second-line antiretroviral, prompted US patent holder Abbott Laboratories to withdraw registration for it and six other drugs in Thailand, a move decried by AIDS activists.

“In late 2006 and early 2007, there were further indications of a weakening of respect for patents, as the Thai Government announced decisions to issue compulsory licenses for several patented pharmaceutical products,” the US report says. “While the United States acknowledges a country's ability to issue such licenses in accordance with WTO [World Trade Organization] rules, the lack of transparency and due process exhibited in Thailand represents a serious concern.”

So what exactly does “the lack of transparency and due process” refer to? The report doesn't say. A USTR official refused to answer when emailed that question on Wednesday.

Moreover, the official declined to answer when asked directly if Thailand’s compulsory licenses were legal under the WHO’s Trade-Related Aspects of Intellectual Property agreement, or TRIPS. Instead, the official repeated the same hazy language of the report: “With respect to compulsory licenses, we urge the Thai Government to engage in an open and transparent process with all interested stakeholders, including the patent holders.”

With its fuzzy assertions, the report serves as yet another ambiguous response that fails to address the real issue of when governments can use compulsory licenses to provide essential drugs to destitute citizens. The Trade Representative knows that if it were to openly declare that Thailand has complied with TRIPS — as indeed, it has — then Washington would essentially be inviting other countries to issue compulsory licenses also. Of course, the powerful pharmaceutical industry is fighting tooth and nail to prevent that from happening.

So now US bureaucrats are left dodging questions while walking a diplomatic tightrope between supporting Big Pharma and claiming to promote access to drugs for poor people in developing countries.

The 301 Report says the US “strongly supports effective and appropriate use of the TRIPS/health solution to facilitate access to life-saving medicines by countries in need.” It fails to say, however, whether Thailand’s compulsory licenses were an “effective and appropriate” use of TRIPS. Instead, the report gripes about an alleged “lack of transparency and due process,” two complaints that hold little water. Apparently the US wanted Thailand to negotiate with drug companies before issuing a compulsory license an action TRIPS does not require, and something Thai officials claimed they tried to do unsuccessfully for two years before issuing the licenses.

Ralph Boyce, the US Ambassador to Thailand, said after meeting with Thai Public Health Minister Mongkol na Songkhla last week that compulsory licensing might not have been necessary if the government had entered talks with drug companies. On Tuesday, he told reporters that compulsory licensing was “one of the concerns, but it is not the main reason for Thailand being placed on the Priority Watch List.”

Susan Schwab, the head of the US Trade Representative, also tiptoed around the issue in a January letter to 22 US Senators who urged the administration of US President George W. Bush to support Thailand’s decision to issue compulsory licenses. “We have not suggested that Thailand has failed to comply with particular national or international rules,” she wrote. “We have indicated that it would be appropriate for the Thai authorities to respond to any requests for direct discussions by concerned stakeholders, including, among others, the patent holder; we have not sought to insert the U.S. government into any such discussions.”

Although US bureaucrats may not think Thailand’s actions are “appropriate” (a far cry from “legal”), there can be no doubt the compulsory licenses were “effective.” Merck immediately lowered the price of the first-line antiretroviral Efavirenz, from 1.400 baht per bottle to 780 baht per bottle. Since the government has opted to import a generic version of Efavirenz from India at 650 baht per bottle for the time being, it can now provide the drug to 20,000 more AIDS patients at the same cost.

The compulsory license for Kaletra and Aluvia, a heat-stable form of the drug that does not require refrigeration, proved even more successful. Shortly afterward, Abbott Laboratories announced that it was cutting the price of the drugs for 45 lower and middle-income countries to $1,000 per month from $2,200 per month. Although the company still refuses to register Aluvia and six other drugs in Thailand until it revokes the compulsory license, 44 other countries will get both drugs at the reduced price with no constraints on compulsory licensing—including China, the worst IPR offender according to the 301 Report.

As the Thai Public Health Ministry noted in its February white paper: “Prior negotiation with the patent holders is not an effective measure and only delays the improvement of access to essential medicines. It is only after the threat or the decision to use and implement compulsory licensing or government use of patent that the negotiation will be more successful and effective.”

In response to the 301 Report, Mongkol said the move was “absolutely legitimate,” according to the Bangkok Post. “We have not done anything wrong,” the minister said. “We followed the process closely by announcing the plan to use compulsory licensing before implementing it.”

Nonetheless, the US government’s reaction is not surprising given that the pharmaceutical lobby is one of the most powerful in Washington, with advocates on both sides of the aisle. The Center for Public Integrity, a Washington-based nonpartisan nonprofit group, released a study last month that said drug companies and their trade groups spent $155 million on federal lobbying from January 2005 to June 2006, in part to protect lucrative patents.

Leading the charge against Thailand now is Ken Adelman, a former US ambassador to the UN and an Iraq War apologist who heads a nonprofit group called USA For Innovation. Perhaps unsurprisingly, Adelman also works for Edelman Public Relations Worldwide, which counts Abbott Laboratories as one of its biggest clients.

Adelman, who once said the Iraq War would be “a cakewalk” and called war critics “Chicken Littles,” wrote in The Washington Times last week that Thailand is part of the “axis of IP evil” and is “stealing US innovation, the cornerstone of the American economy.”

His group was more brazen in an ad published in the Wall Street Journal. After accusing the Thai Public Health ministry of threatening “to kidnap American tourists,” the ad goes on to say the government is “stealing American assets for military benefit.”

The propaganda campaign adeptly fluctuates between fact and fiction, mixing legitimate concerns about democracy and military spending with half-truths about the legality of compulsory licenses and the costs of medicines in Thailand.

Of course, USA for Innovation and other propaganda groups will never cite an August 2006 World Bank study that calls for Thailand to resist Big Pharma and use compulsory licensing to reduce HIV/AIDS drug costs by up to $3.2 billion by 2025. It also won’t refer to letters of support sent to the Thai government from the World Health Organization, UNAIDS, and countless NGOs, including the Clinton Foundation headed by former president Bill Clinton.

“Medicines are a substantial element of health care costs, and it is entirely appropriate and necessary for the government of Thailand to find means of reducing these costs to ensure sustainable financing of health care,” said a February letter to the Thai government written by WHO director-general Dr. Margaret Chan, which added that the compulsory licenses were “fully in line with the TRIPS agreement.”

Although it’s expected that the pharmaceutical lobby will scream and shout when a country invokes its rights under TRIPS, more should be expected from the US government. Bureaucrats should have the courage to give a yes-or-no answer to whether Thailand’s compulsory licenses comply with TRIPS.

If the US truly wants to act as a leader on public health, it should unequivocally state what the rules are and how countries can comply with them instead of coming up with cute diplomatic language that misses the point.