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Thai Patent Turmoil
Ron Cass, Wall Street Journal Asia, 3-12-07

Cass argues that Thailand's recent assault on pharmaceutical patents is being driven not by public health considerations but by crass budget calculations.

Thailand is an especially bad fit with any reasoned argument for compulsory licensing. While it is not at the top of the world's wealth or population charts, it is neither small nor poor by world standards. At 65 million, Thailand is the world's 19th most populous nation. And it is comfortably in the top half of all nations ranked by per capita GDP, with an average income 15 times that of the world's poorest countries.

Thailand's current regime took office via military coup last fall, and kept on taking. Shortly after the new government seized power, its military leaders awarded themselves pay increases that amounted to over $9 million a year. They cut its public health budget by $12 million—not because they lacked funds, but because they had different priorities. In addition to raising their own pay, they increased the military budget by more than one third, or $1.1 billion. The government then declared its universal health–care program too costly and instituted compulsory licensing for certain patented HIV and cardiovascular drugs as emergency measures under the World Trade Organization's Trade–Related Aspects of Intellectual Property Rights, or TRIPs, agreement.

Thailand's assertion of a right under TRIPs to impose compulsory licensing rests on shaky ground. TRIPs Article 31 permits compulsory licensing for "public non–commercial use." This phrase comprehends uses such as public research programs, not monopoly provision by a for–profit government agency. Only the most cynical distortion of the text could conceivably cover Thailand's conduct here.

Article 31 also authorizes compulsory licensing when needed to fight "national emergencies" or "other circumstances of extreme urgency." Thailand does not fit under these provisions either. AIDS is an awful disease that affects far too many Thais. It should command attention from Thai health officials. But Thailand today has a relatively low rate of HIV/AIDS compared to much of the developing world, has enjoyed notable success in reducing the rate of new infections (cutting the annual increase to about 13% of its level a decade before), and has seen a dramatic decrease in its AIDS death rate since 2000.

If there were an emergency, Thailand wouldn't gain much from compulsory licensing. It already benefits from cut–rate pricing on the AIDS drugs it is commandeering. Thai officials estimate compulsory licensing will save $24 million per year—a mere 2% of Thailand's additional military spending. That itself may be the motivation for its actions, but a desire to shift funds from health care to military spending or personal pay isn't recognized under TRIPs as a valid reason for violating patent rights.

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