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Baptists and Bootleggers

Philip Stevens
Medical Progress Today
March 23, 2007

Westerners have long been interested in Thailand because of its idyllic beaches, remarkable cuisine and welcoming people. In recent weeks Thailand has become a whole lot more interesting, not least because it has decided to hold the global intellectual property system to ransom by issuing compulsory licenses on a series of medicines patented by western pharmaceutical companies.

The Thai military government has justified its decision to breach patents and manufacture drugs itself by claiming that it cannot afford to meet its commitment to universal healthcare with the current price of drugs. Meanwhile, its actions have been applauded by a broad coalition of 'consumer' NGOs, and health activist groups such as Médecins sans Frontières (MSF) who have long been campaigning against international intellectual property rights.

But is all this in the interest of Thai patients, as this coalition claims? Rhetoric aside, the assault on pharmaceutical patents is being driven by an unholy mix of ideology and cynical self–interest, a noxious brew that stands to undermine both patient safety and health.

In fact, the Thai situation is a classic case of 'bootleggers and Baptists'. Before prohibition, Baptist groups campaigned to ban alcohol sales on Sundays. Bootleggers, meanwhile, were enthusiastic supporters of such a ban because it gave them a day of complete monopoly in the alcohol market, allowing them to reap windfall profits. After all, demand for alcohol does not decline simply because it is made illegal to sell it.

Bootleggers and Baptists both wanted the same outcome, but for entirely different reasons.

In the case of Thailand, the Baptists are MSF and the other activist groups, and the bootleggers are the Thai government. The activists have an ideological dislike of markets and profit in healthcare, and have long campaigned to make medicines 'public goods'. As such, they are completely behind the Thai government's decision to abrogate patent rights and manufacture drugs themselves. The Thai government, on the other hand, appears to be driven more by the search for markets and profits.

Behind all the talk of increasing access to medicines, the Thai government’s true intention is to establish itself as a dominant regional manufacturer of generic drugs and significantly increase the revenue of its state-owned drug manufacturer, the Government Pharmaceutical Organisation (GPO). This would simultaneously bring foreign exchange into the country as well as provide opportunities for individual bureaucrats to enrich themselves.

The GPO certainly has a track record of corruption. The Thai Auditor General reported in 2002 that the GPO had stolen around $13m from the government over the previous four years. That same report revealed that in 2002 "the GPO sold about 60% of its medical products to government agencies above market prices. In some cases products were marked up 1,000 per cent". In 2005, the GPO made a profit of around $35.5m, and re–invested a negligible 2% of this sum on R&D.

There are other inconsistencies to this story which undermine the Thai government's claim that this is all about public health. The government has claimed that the compulsory license and decision to locally manufacture copies of Merck's Efavirenz, a 1st line anti–retroviral, is required to make its AIDS treatment programme affordable. Manufacture is likely to start in 2009.

However, the Global Fund has said that it will pay now for Efavirenz copies from India that are already on the WHO's Pre-qualification list. This means Thai patients would immediately get WHO–endorsed medicines at no cost to themselves. The government is instead asking Thai taxpayers to foot the bill for producing the drugs locally, instead of taking advantage of the international community's philanthropy via the Global Fund.

Furthermore, why does the Thai government exclude other private Thai manufacturers from procurement contracts, if the need is so great as to require a compulsory license? Why does Thailand continue to impose 18% tariffs on imported drugs? And why, if there is a health care crisis, has the government raised military spending by $1.1bn and cut health spending by $12m?

None of this is good for patients. Thailand has previously experimented with producing its own ARV copies and the results are already clear. Rewind to 2002, when the Global Fund for HIV/Aids awarded Thailand US$133 million to test and manufacture its locally–made triple–dose combination–anti–retroviral (ARV) called GPO–Vir. The grant carried two conditions: Thailand had in the interim to purchase the drugs from companies pre–qualified by the World Health Organisation, and the Government Pharmaceutical Organisation facilities had to meet international standards in two years' time.

Last August, the Global Fund finally withdrew funding for GPO-Vir because the GPO still had not brought its facilities up to standard, nor had the WHO pre-qualified the drug. But it was too little too late: Thai scientists had announced back in July 2005 that the poor-quality GPO-Vir was causing a rise in drug resistant AIDS cases in Thai patients.

The effect of using substandard drugs was to force patients onto "second-line" therapies—increasing the drug price from $24 per person per month to $239, according to MSF's own figures.

Although the WHO considered GPO-Vir inadequate for sale outside Thailand, this drug continues to be used on Thai patients. MSF proudly says: "Thanks to this, over 85,000 people with HIV/Aids are today receiving treatment" in Thailand—and MSF distributes GPO-Vir in Burma too.

Thailand has also expressed its intention to manufacture copies of branded drugs for a host of chronic diseases. The experience with substandard GPO-Vir should be giving the activist groups that claim to speak for poor patients real cause for concern.

In a heart patient, a drug like Plavix (another target of the compulsory licenses) is designed to achieve certain biological effects once administered—if the dosage form is correct, and the active ingredient meets Good Manufacturing Practice specifications. If the active ingredient has been reduced, or if the dosage form is too low, it will result in adverse effects in the patient. Rather than treating the problem, substandard drugs can cause an entirely new problem with a patient's heart condition, such as raised blood pressure or an increased heart rate.

Far from denouncing the Thai government's dangerous and self-interested policies, activist groups like MSF urge them to go further and faster, despite the obvious risk to patient safety. Back in prohibition days, drinkers had to make do with poor quality moonshine because of the coalition of the Baptists and bootleggers. It would be terrible for the same thing to happen to vital medicines.

Philip Stevens is the Health Programme Director at the International Policy Network and the author of numerous health policy publications, including Fighting the diseases of poverty (2007), Free trade for better health (2005), and The 10/90 Gap and the diseases of poverty (2004). His writings on health policy have appeared in a wide range of international newspapers. Philip has also held research positions at the Adam Smith Institute and Reform in London, and spent several years as a management consultant. He holds degrees from the London School of Economics and Durham University.
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