PhRMA takes aim at Thailand for production of generics, hints that it will push for sanctions

Drug companies are making a concerted effort to increase pressure on Thailand and other developing countries to honor U.S. drug patents.

The Pharmaceutical Research and Manufacturers Association (PhRMA) is alarmed by Thailand’s decision to authorize the production of generic versions of two AIDS drugs that are still under U.S. company patents, as well as one cardiovascular drug.

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In particular, U.S. drug-makers worry that other countries could emulate Thailand’s decision. Brazil earlier this month announced it will authorize a license for the production of an AIDS drugs, PhRMA notes.

PhRMA President and Chief Executive Officer Bill Tauzin said that in the long term, this move could cost U.S. jobs and cause the entire system of protecting intellectual property “to crumble.”

If other countries also issue compulsory licenses for the production of generic drugs, particularly emerging markets like Thailand, Tauzin said U.S. consumers would be forced to carry a greater burden of covering the industry’s research and development costs.

World Trade Organization (WTO) rules do grant poor countries the right to issue compulsory licenses authorizing the production of generic drugs to deal with public health crises. But critics feel Thailand is pushing the envelope by announcing a license for Plavix, a cardiovascular disease medication.

Tauzin met with Thailand Health Minister Mongkol na Songkhla on Tuesday to discuss the issuance of the three compulsory licenses. In a follow-up call to reporters, Tauzin emphasized that his talks with the Thai minister were frank and helpful, and that Mongkol emphasized that his country sees the issuance of compulsory licenses as a rare event.

Thailand officials have also suggested they may issue a compulsory license for a cancer drug, but Tauzin said Mongkol
offered nothing new during the meeting on that subject.

Tauzin said Mongkol’s message to PhRMA was that many of Thailand’s citizens are mired in poverty and that the country has a need for access to cheap medicines. Tauzin said PhRMA’s hope is that Thailand will fully consult with U.S.
companies to lower drug costs without resorting to authorizing the production of generic drugs.

At the same time, Tauzin said that if Thailand continues to issue compulsory licenses for the production of drugs protected by patents, PhRMA could press the administration for tougher action. He specifically mentioned the possibility that the U.S. could eliminate trade preferences allowing some Thai imports to enter the country duty-free.

Indeed, the Office of the U.S. Trade Representative late last month issued an annual U.S. report on the status of intellectual property protections that faulted Thailand for deteriorating patent protections. The Special 301 report elevated Thailand to a list of “priority watch” countries, which could lead to a decision to withdraw trade preferences.

But it is unclear whether Washington will want to punish poor countries that issue compulsory licenses to increase their supplies of affordable drugs, particularly with Democrats in charge of Congress and PhRMA’s influence on the wane.

Thailand’s actions have received support from some key advocates, including former President Bill Clinton, whose Clinton Foundation has worked with drug companies to lower prices for medicines in developing countries. The Reuters news service this week quoted Clinton as stating that “no company will live or die because of high price premiums for AIDS drugs in middle-income countries, but patients may.”

Rep. Henry Waxman (D-Calif.), in a statement released after his meeting with the health minister said the U.S. should respect Thailand’s decision.

But some in the pharmaceutical industry believe members of Congress will draw a distinction between drugs for the treatment of AIDS, malaria and tuberculosis, and those for other diseases such as cancer or heart disease. “How can a chronic, slow-acting, non-contagious condition be considered a public-health crisis?” asked one lobbyist. He suggested there could be bipartisan support for actions against Thailand or other countries that issue compulsory licenses for non-AIDS drugs.

In March, five Democratic senators and 12 Democratic House members raised the issue in letters to U.S. Trade Representative Susan Schwab. They said the use of WTO rules to produce generic AIDS drugs is one thing, but the rules were not intended to be used on just any medicine.

While Thailand has argued the issuance of compulsory licenses was necessary to pay for drugs through its national health-care system, Tauzin said the country’s government, run by the military after a coup last year, has increased military spending while arguing it cannot afford to pay for patented drugs.  

Tauzin said the debate will always be controversial because finding the balance between access to medicines and paying for research and development costs is always difficult. At the same time, he expressed some confidence that PhRMA’s arguments would have support.