This MSF report to the national AIDS committee of Thailand describes access to HIV/AIDS drugs in Thailand and issues related to TRIPS– including US pressure on Thailand to adopt “TRIPS plus” standards – and recommends that the government take measures to encourage generic competition.
Situation Review
Introduction
Our world is increasingly affected by globalisation: a process dominated by market influences that have a negative impact on public health in developing countries. The UNDP points out, in a recent report, that developing countries are merely passive recipients of the effects of globalization rather than its beneficiaries. Several developing countries have been subject to pressure from Western governments to make changes in trade laws that would restrict their ability to produce or import drugs. In May of this year the World Health Organisation was given a mandate to monitor the health consequences of international trade agreements.
TRIPS and the World Trade Agreements
The World Trade Agreements, signed in 1994, were a decisive step towards a world-wide free trade economy. In signing these agreements, member states of the World Trade Organisation (WTO) must abide by a number of multilateral agreements, of which the TRIPS agreements (Trade-Related Aspects of Intellectual Property Rights) will probably have the greatest impact on access to medicines. TRIPS covers patent law, setting a number of minimum standards such as 20-year patent protection for pharmaceuticals. TRIPS does not forbid the importing of medicines from countries other than the country of manufacture (parallel importing); in certain instances, such as public health emergencies or unfair pricing practices, TRIPS also allows the production of medicines by companies other than the patent holder (compulsory licensing). Compulsory licensing and parallel importing are both widely practised by Western countries. However, developing countries have been pressured by Western governments to ban compulsory licensing and parallel imports. For example, Thailand has been subject to US trade pressure, which has limited access to affordable treatment for HIV/AIDS.
The role of WHO
An attempt to confer to WHO a role in monitoring international trade agreements was strongly opposed at the 1998 World Health Assembly: US State Department representatives threatened to withdraw WHO funding when faced with aggressive WHO support for improved access to patented medicines in developing countries.
Therefore it is welcome news that this year the 52nd World Health Assembly, WHO was given a mandate to monitor the public health consequences of international trade agreements. This new responsibility is contained within the Revised Drug Strategy, the WHO policy designed to ensure equitable access to essential drugs and to good treatment. The Revised Drug Strategy is a comprehensive policy that addresses all players, including member states and industry, but the role of WHO appears to be limited to monitoring the consequences of WTO agreements such as TRIPS.
International trade agreements (TRIPS) are one thing but bilateral trade pressure ("TRIPS PLUS") is another. This is why the NGO community needs to take role in monitoring the consequences of "TRIPS PLUS".
Access to HIV treatment in Thailand
HIV/AIDS is a disease that affects many parts of society. It decreases child survival and life expectancy. There is an increased number of orphans and the healthcare system is overburdened. Most people with HIV/AIDS are of working age, which means losses to business as well. The situation for people with HIV/AIDS has been made worse by the economic crisis that has affected Thailand since the middle of 1997.
In spite of Thailand's successful approach to prevention of HIV infection, about one million people are infected with HIV. In 1995 a World Bank / WHO review advised Thailand to focus its limited HIV drug resources on the prevention of perinatal HIV infection and on management of opportunistic infections. The AIDS Division has issued guidelines for prevention and treatment of opportunistic infections. Short-course zidovudine to limit perinatal transmission is also being implemented.
However these interventions alone are not an answer to the huge amount of personal suffering and social disruption caused by the HIV epidemic. The reality is that few patients can afford antiretrovirals: the monthly price of effective treatment regimens containing three drugs is in the range 18,000 baht to 26,000 baht per month.
In fact the real price of most of these drugs should be much lower. Drugs such as AZT, ddI, d4T, 3TC, efavirenz and niverapine are simple compounds which are easy to produce and formulate. The Thai Government Pharmaceutical Organisation (GPO) has supplied generic AZT (zidovudine) since 1993. The resulting competition led to a fall in the price of AZT 100mg capsule from 48 baht in 1992 to 12 baht in 1995.
Antiretroviral drugs have an expensive image because of marketing practices of the pharmaceutical industry. The industry claims that it needs to sell the medicines at a high price to recoup costs of research and development, but in fact most of these drugs were developed by US Government funded institutions, not the pharmaceutical industry (see history of DDI).
"TRIPS PLUS" - US pressure to change Thai patent law
Thailand is capable of producing good-quality cheap generic drugs, but local production has been limited by US government trade pressure. The US government regards TRIPS as a minimum standard and in bilateral discussions often asks for additional commitments, using threats of trade sanctions to achieve its objectives. The US is the destination of 25 % of Thai exports, so these threats are taken very seriously.
In 1992, under threat from the US to limit textile imports, the Thai government passed a law banning parallel imports (parallel imports will be allowed again with the amended patent law going in effect 1999). In 1993 Thailand introduced pipeline protection for pharmaceuticals under pressure from the United States. As a safeguard, the Thai government created the Pharmaceutical Patent Review Board, which had authority to collect economic data, including the production cost of pharmaceuticals. The US Trade Representative Office objected and in 1998, under threat of higher tariffs on imports of wood products and jewellery, the Pharmaceutical Patent Review Board was disbanded and measures were taken which led to banning the right to issue compulsory licenses for pharmaceuticals.
The US government regards TRIPS as minimum requirements and pressurizes developing countries like Thailand or South Africa to comply with higher standards. This practice has no justification in international law.
Problems and Resolutions
In Thailand the access to affordable generics depends on a number of factors. The ability to market a generic product is closely linked to the Thai patent law. Most importantly, the situation will depend on if the drug was invented before or after 1992.
Thai Patent Law. Before 1992 Thai patent law only granted process patents. This means that only the process to manufacture a product is patent protected. If the same drug can be produced by a slightly different process, no patent protection exists. On September 30, 1992 Thai patent law was changed to grant product patents which is a much stricter patent protection. Of note is that the new law is not applied retroactively and that previous process patents can not be extended to product patents.
Drugs invented before 1992. Antiretroviral medications that we perceive as relatively new were almost all patented before 1992. The reason is that pharmaceutical companies apply for a patent very early during the Research and Development process. R&D of a new drug takes normally 8-12 years from the discovery of an active molecule to drug approval; the patent application is made as soon as a promising molecule has been identified.
Obviously pharmaceutical companies have a strong financial interest to have market monopoly on their product. Since products invented before 1992 do not have product patent protection in Thailand, pharmaceutical companies want to have exclusive marketing rights instead. The Safety Monitoring Period (SMP) gives this exclusive marketing rights. Under pressure from the United States these provisions were even further extended in 1993 (pipeline protection).
2.3.1. The Safety Monitoring Program (SMP) For medicines that have never been used in Thailand (new chemical entities, new combinations, new indications or new delivery systems), the FDA requires to the manufacturer to submit safety and efficacy results. After conditional approval has been granted the product enters the Safety Monitoring Program (SMP) where the drug is supposed to prove its efficiency and safety among the Thai population. During its time in the SMP, the drug is only allowed to be sold in hospitals and private clinics, and the manufacturer must report to the FDA any adverse reaction. After the release from the SMP the product can be sold in the open market and any other company can import or produce copies of it (generics). Only drugs that are released from the SMP can be included in the Essential Drug List and are covered by insurance plans.
The SMP process should in principle take two years. But since 1993, following US pressure for a longer market exclusivity period (pipeline protection), pharmaceutical companies are allowed to ask for two successive extensions of 1 year. This leads to SMP duration of 4 years after which the company analyses the collected data (further delay of approx. 6 months) and the FDA decides on final approval (approx. 6 month). This leads in practice to a total duration of 5 to 6 years of SMP and thus market exclusivity, preventing Thai companies from producing copies of the drug. Bioequivalence studies are allowed to start at the beginning of the third year of SMP. There is no clinical justification for the extension of the Safety Monitoring Program since 1993. So far it has not been considered to allow generic products during the SMP and to include them in the monitoring process.
More recently companies have started to prefer a shorter SMP in order for the drug to enter the Essential Drug List and be reimbursed by health insurances (most people do not have health insurance!). At the same time companies want to maintain their exclusive marketing rights of 5-6 years.
In our opinion, the safety monitoring program for pharmaceuticals is currently abused as a means of providing exclusive marketing rights. Clinical evaluation of the safety and efficacy of new medicines, should be based only on scientific not commercial grounds.
Drugs invented since 1992. Drugs that were invented since 1992 are patentable in Thailand. The Thai patent law has been further amended recently to be compliant with TRIPS. The amended law will become effective September 1999. In compliance with TRIPS patent protection is 20 years. Since patents are filed early during R&D this leaves usually not more than 10 years of patent protection after drug approval. Still this is a long time for patients that can not afford brand name products. There is no possibility to extend the patent beyond 20 years. The amended patent law allows for research (i.e. preparation and bioequivalence studies of generics) during the patent term which means generics can become available immediately after patent expiry.
Compulsory Licensing. Thai patent law, in compliance with TRIPS, allows for compulsory licensing in case of public health emergencies and certain other instances.
Lack of technology transfer is another reason to apply compulsory license. Contrary to predictions by developed countries, patent protection (or equivalent exclusive marketing rights) seems to lead to a decrease in technology transfer (especially reverse technology). So far compulsory license has not been used in Thailand.
In 1993, again under US pressure, ministerial regulations were issued restricting the use of compulsory license (Patent Act, section 46. The regulations concern the company's obligation for local working of the product. Some of these regulations are very broad. For example, the absence of local working can not be used to issue a compulsory license if the demand on the product is too small in the country. In practice this could mean that the demand on a drug is small because of its high price even if there is a great need for it in the country. The exact implications of these regulations need further investigation. Clearly though, government use for public health reasons (Patent Act, section 51) is not restricted by the regulations.
Therefore, for drugs patented since 1992 and in the future, compulsory licensing, should become an important tool (mostly through section 51 of the Patent Act) to protect public health by making medicines affordable to the public.
Price control. Currently the price of pharmaceuticals is not controlled in Thailand. The overall philosophy of the Ministry of Commerce is to have a free market environment. Despite their importance for the basic good of health, drugs are not treated differently than any other consumer products. The department of Internal Trade within the Ministry of Commerce monitors prices of all products and companies have to justify price increases. The initial setting of the price is almost free and is only compared to prices in the same cluster of products. At present only two consumer products are price controlled: sugar and cooking gas. The reason for the price control in these cases are price fluctuations; the controlled price is set as an average of previous prices, not as a percentage of minimum income.
There is a new competition law in Thailand since this year. We observed different opinions to whether the competition law or the law for Goods and Services could be applied to set maximum prices for pharmaceuticals to make them affordable for Thai people.
In many countries price control for pharmaceuticals continues to be practiced since drugs are considered different from other consumer goods.
2.5.1. Pricing of ddI. Research &Development of ddI was funded by the US National Institutes for Health (NIH), and exclusive production rights in the US were then granted to Bristol-Myers Squibb (BMS).
The agreement between NIH and BMS includes a reasonable-pricing clause, which seems to have been overlooked in this case. In September 1998, A group of Thai NGOs, including MSF, asked Ms Donna Shalala, Director of the US Dept of Health and Human Services to investigate this. We received no reply so we asked NGO colleagues from the US to follow-up our request. Our US friends met with high-ranking officials from several US Government Departments in May 1999. At this meeting, US Government officials gave a commitment to investigate the pricing of DDI in Thailand. They also acknowledged that in future they needed a better balance of information before formulating policies that have a public health impact.
Generic drugs in Thailand
Thai pharmaceutical companies produce high quality, affordable generic drugs from imported raw materials. A good example is Fluconazole. Fluconazole is a key drug in the management of cryptococcal meningitis, a lethal opportunistic infection affecting one in five AIDS patients in Thailand. Until recently Pfizer was the sole supplier of fluconazole in Thailand, charging a daily price (dosage: 400mg) of more than 500 baht. In 1998, fluconazole was released from SMP protection in Thailand and is now supplied by three local pharmaceutical companies. The price has fallen to five percent of the 1998 price, which represents a huge potential annual saving to Thailand in the treatment of cryptococcal meningitis. HIV physicians have reported improved compliance with treatment now that the treatment is more affordable. MSF is examining, if the experienced decline in cryptococcal meningitis can be scientifically documented.
Recommendations
Access to affordable medicines should be a priority for the government of any country. This is of particular importance for AIDS patients.
We urge the Thai government to take all necessary steps to improve the access to affordable medicines.
We recommend the Ministry of Public Health to increase collaboration with the Ministry of Commerce and inform it of undesirable trade effects on public health including access to drugs
We recommend to investigate further how to speed up the Safety monitoring Program to allow generic competition of non patented drugs as soon as possible, without impeding safety assessment.
Since pharmaceuticals prices are essentially regulated by market forces in Thailand, the Business Competition Act and/or the Price of Goods and Services Act should be used so as to repair market failure that may result in excessive drug prices
In accordance with TRIPS the Thai Patent Act provides for the use of compulsory license to protect public health. Compulsory license can become an important tool to improve access to drugs in the future. The use of compulsory license should not be restricted by additional regulations.
Thailand has changed its laws to be compliant with the TRIPS agreement. The "TRIPS-PLUS" approach by the US government has no justification in international law. We encourage the Thai Government to resist unilateral pressure. Health NGO's, like MSF can be a tool in bringing cases of unilateral pressure on Thailand to international media attention.