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Drugs in Thailand: The government should take care about ripping up patents
Financial Times, 1-31-07

The Financial Times warns that Thailand's recent assault on drug patents sets a bad precedent that could undermine access to new medicines in the poorest countries.

At the end of November, the health ministry unveiled plans to issue a "compulsory licence" under World Trade Organisation rules against Merck of the US, allowing it to override the company's intellectual property protection on Stocrin, an HIV drug, and buy cheaper supplies from generic suppliers in India. This week, it threatened further compulsory licences against another two products, including Plavix, Sanofi–Aventis's best–selling blood–thinning drug.

At a human level, Thailand's move is understandable. The country has committed to free universal healthcare, and faces a particular challenge in treating a large number of HIV-positive patients with drugs that are costly even for far richer countries.

In a strict legal sense, it may also be able to defend its position. WTO rules do allow for the issue of compulsory licences for pharmaceuticals to override the usual patent protection rights for public health reasons. Drug companies certainly need to do more to ensure that they are offering tiered pricing, ensuring that their drugs are sold at significantly lower prices in poorer countries. That makes good economic as well as moral sense.

Lower pricing would be helped by more aggressive sub–contracting or out–licensing of their drugs to reliable generic producers that specialise in making medicines at the lowest possible cost. But the WTO concessions won agreement between health activists and pharmaceutical companies in the context of delivering low–cost medicines to extremely poor countries suffering from public health emergencies.

Widening the interpretation to include a patented cardio–vascular blood–thinning preventative drug, when many more affordable and off–patent alternatives are available, weakens that consensus and could end up making the rules tougher in future.

While Thailand remains relatively poor, it and other emerging economies such as India (also currently subject to a legal challenge to its patent regime) also have a growing middle class that can increasingly afford to pay for medicines and should begin to help share the cost of future drug innovation.

The debate over whether innovation is best protected and stimulated by the existing patent regime is an important one. But forcing the issue in Thailand when there is scant evidence of the effectiveness of alternative models is counter–productive.

As poor countries grow in wealth, there is the natural temptation to undermine patents in order to subsidize health care services rather than allot more funding to health care budgets.

In the long run, the global assault on pharmaceutical profits and patents places an increasing strain on U.S. consumers, who pay the highest global prices and are therefore paying the lion's share of global pharmaceutical R&D. In a world of transparent pricing, this arrangement is ultimately untenable. When American consumers eventually revolt, Thailand and other poor nations will have fewer new drugs to reverse–engineer, and everyone will be worse off.

Project FDA.
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