TRIPS and Public Health: Thailand’s Compulsory Licenses over Patented Drugs for Chronic Diseases December 2, 2013 By Sakda Thanitcul

I. Introduction  TRIPS and flexibility (Article 31)  Public health crisis  Access to essential medicines  “Breakthrough (Blockbuster)” patented drugs - Infectious diseases (HIV/AIDS, malaria, tuberculosis) - Chronic diseases (Coronary heart disease, strokes, cancers, chronic lung disease, diabetes)  Compulsory licenses

 Why there is a problem? Thailand’s authorization of compulsory licenses for 1. First line HIV/AIDS patented drug (Efivarenz, Merke) 2. Second line HIV/AIDS patented drug (Kaletra, Abbot) 3. Heart disease patented drug (Plavix, Sanofi-Aventis)

 “Public non-commercial use” for 1. Civil servant medical benefit scheme 2. Social security scheme 3. Universal coverage scheme

 How compulsory licenses work in Thailand 1. Department of Disease Control issues Notification (Shorei) entrusting CL to Government Pharmaceutical Organization (GPO) 2. GPO imports generic drugs from India. 3. GPO sells imported generic drugs to state hospitals. 4. State hospitals dispense drugs to patients.

 WHO’s Report on “Double Burden”  35 million annual deaths due to non-communicable diseases in  41 million in 2015  80% of 35 million were in low-and-middle income country  In 2010, India will have the largest number of diabetics

 Double Burden vs. Trade Benefit  Double burden ,Chinawill lose $ 131 billion ,Indiawill lose $ 54 billion  Trade benefit ,China will gain $ 287 billion from free trade  The shrinking trade gain → to put at risk the whole intellectual property right system ??  Thailand GSP (General System of Preference) vs. Public Health MOC vs. MOPH?

II. Policy Choices to Bring down Prices of Patented Drugs 1. Use competition laws - Article 8 (abuse of IPRs; Morton Salt v. Suppiger) - Article 40 (misuse of licensing agreeement; Microsoft II) - Article 8 (United States v. Glaxo Group)

- South Africa Hazel Tau et al. v. Glaxo Smith Kline and Boehringer Ingelheim (settled in 2003) - Can Thailand use a competition law?  Inexperienced, weak institutional arrangement  Complicated proceedings  The change of facts - Canada Paradise Pharmacy, Inc. v. Novartis Pharmaceuticals Canada, Inc. (2004 Comp. Trib. 21)

2. Use price control laws  Sugar, instant noodle, cooking oil or student uniform  Patented drug (ingredient, marketing and R&D)  OECD except the U.S. has price control mechanism on prescription drugs  Thailand removed the “drug patent committee” from its patent law  Canada uses “median price”

2. Use TRIPS’ flexibility (Article 31) and the Doha Declaration  Efavirenze: 1,400 Baht ($40) down to 650 Baht ($18) (500,000 patients)  Kaletra: down 80%  Plavix: accessibility 6-12 times higher (300,000 patients)  2007 – 2011  84,000 patients could access  7,000 m. Baht (200 m.) was saved

III. Are the Thai Government Measures TRIPS – Consistent? Article 31requirements Chapeau – the national law allows compulsory licensing Specific(a) Considered on its merit (b) “National emergency” or “circumstances of urgency” or “public non- commercial use”, the requirements to negotiate with the patent holder is waived (c) Use as initially authorized (d) Such use shall be non-exclusive (e) Such use shall be non-assignable (f) Such use shall be predominantly for domestic market (g) Such use must be reviewed (h) The rights holder shall be paid adequate compensation (i) Legal validity must be reviewed (j) Compensation must be reviewed

Note: (1) Paragraph 6 of the Doha Declaration makes (f) and (h) more flexible (2) Compulsory licensing under Article 31 is an important tool for negotiation (e.g. Brazil) (3) Mozambique, Zimbabwe, Zambia, Malaysia, Indonesia, Guinee and Eritrea actually used compulsory licensing over HIV/AIDS patented drugs.

Legal problems with “Plavix” 1.Does Thailand have to negotiate with Sanofi-Aventis?  GPO is “for-profit” entity (Sanofi-Aventis)  Paragraph 5(c) allows WTO members to identify “national emergency” and “circumstances of extreme urgency” not “public non-commercial use” (Sanofi-Aventis)  Paragraph 4: Article 31 should be interpreted… to protect public health (Thai government) 2.Are chronic drugs included in the Doha Declaration?  Paragraph 5(c) specifies HIV/AIDS, tuberculosis, malaria, and other epidemics (Sanofi-Aventis)  The U.S. Representative’s initial position limited solution to HIV/AIDS, tuberculosis, and tuberculosis (Carlos Correa)

IV. TRIPS and Future Public Health Crisis: Thailand Test  China, India behave economically rational in the future – shake the WTO system?  Test the ability of TRIPS and pharmaceutical industry to adapt to the “double burden” occurring in developing countries  Thailand, export benefit vs. public health

Thank You Very Much for Your Kind Attention!!