Thailand's Compulsory Licenses on Drugs: Good Step for Public Health or Bad Precedent for Intellectual Property?

U.S. Congressional Briefing co-sponsored by Senator Sherrod Brown and Representative Tom Allen

Speakers include:

• Dr. Buddhima Lokuge, U.S. Manager of the Campaign for Access to Essential Medicines at Doctors Without Borders/Médecins Sans Frontières (MSF)
• Mark Grayson, Deputy Vice President for Communications at the Pharmaceutical Research and Manufacturers of America (PhRMA)
• James Love, Director of Knowledge Ecology International, an international non-government organization specializing in intellectual property issues
• Robert Weissman, Director of Essential Action, and a legal advisor on intellectual property rules for bodies such as the World Health Organization
• Dean Ronald A. Cass, Dean Emeritus of Boston University School of Law, Chairman of the Center for the Rule of Law, and former Commissioner and Vice-Chair of the U.S. International Trade Commission

March 16, 2007

Presentation by

Dr. Buddhima Lokuge

Good morning and thank you for inviting me here today to talk about this important topic. Doctors Without Borders/Médecins Sans Frontières is here to voice our frustrations about the crisis faced by people living with HIV/AIDS in Thailand and throughout the developing world who need second-line treatment. As a doctor, I am even more disturbed because this crisis comes at a time when millions around the world still have no access to first-line medicines.

Since the late 1990s MSF has been providing health services to people living with HIV/AIDS in resource-poor settings, particularly in Africa and Asia. At the time we began our programs, there was a cynical conventional wisdom that poor people would never have access to Highly Active Anti-Retroviral Treatment that was available to people in the developed world. At the time, a year's supply of patented first-line medicines cost between $10,000 and $15,000.

The availability of quality low-cost generic ARVs in early 2001 meant that MSF and others could finally begin treating people with the disease. As a result of this generic competition, a course of first line treatment for HIV from generic sources is now less than $150 per patient per year and has allowed significant scale up of treatment programs internationally. As a recent report by the President's Emergency Plan for AIDS Relief has noted, the use of generic medicines has allowed PEPFAR to achieve cost savings and enable a greater number to be treated with existing resources. The use of generics by PEFPAR, the Global Fund and others has meant that more than 1.3 million people are on treatment, or nearly 25% of the PLWHA needing ARVs in developing countries.

Worldwide, MSF provides ARV treatment to more than 80,000 people in over 30 countries. These lucky few patients, though, are threatened once again. As patients develop resistance and toxicity to first line regimes, many need to switch to newer second line medicines. In one MSF project in Khayelitsha, South Africa, 20% of patients needed to be switched to a second-line regimen after being on treatment for five years. These numbers will only grow in the coming years, but the medicines used for second-line therapy are mostly unavailable or unaffordable in developing countries. Second-line anti-retroviral medicines cost at best 5 times the price of the current first-line treatments and, in countries like Thailand, as much as 22 times.

For more than a year now MSF has been trying to obtain the new heat-stable formulation of Kaletra, a vital second line therapy needed in our HIV/AIDs programs from Abbott Laboratories. The new formulation has a number of advantages in resource-limited settings, most important is the fact that it does not require refrigeration.

Heat-stable Kaletra was registered for sale in the US in October 2005. Many people including my colleagues around the world have an urgent need for this drug. Since last March, MSF has called on the manufacturer to make the product available in developing countries including Kenya, Malawi and Nigeria. The company did agree to sell the medicine to MSF, but because the drug is not registered in most of the countries where we work, our teams need to go through a time-wasting bureaucratic exercise to obtain special authorizations to import the drug.

In August last year, Abbott announced a price for Kaletra of US$ 500 per patient per year for Africa and least-developed countries. The company also announced a price of US$ 2,200 per patient per year in low-income and low-middle income countries, such as Thailand, which, must be noted, far exceeds what most people there can afford. Since then, Abbott has failed to provide any information in response to MSF's repeated requests for a registration status update. So without registration, these discounted prices only exist on the paper from their press releases. And by withdrawing registration in Thailand in a tit-for-tat retaliation for the country utilizing legally recognized compulsory licenses, patients will ultimately pay the price.

MSF has worked in Thailand since 1976. The organization began providing ARV treatment in 2000, and we have witnessed the development of the Thai AIDS treatment program. Generic production is the cornerstone of Thailand's universal HIV/AIDS treatment program. Before generic production, the cost of standard HIV/AIDS treatment in Thailand was over 33,330 baht per patient per month (US $924), and only 3,000 people were getting treatment. Today, nearly 100,000 people are on ARVs, while approximately 100,000 more require it.

Both the WHO (in August 2005) and the World Bank (in August 2006) predicted dramatically rising drug costs in Thailand because of the second-line crisis. The World Bank identified the use of compulsory licenses to produce less-expensive generic medicines as a strategy to address the rising costs in order to continue providing universal coverage for HIV/AIDS treatment to the estimated 200,000 people who need ARVs.

It is important to point out again that compulsory licenses are legally recognized means to overcome the barriers created by monopolistic pricing practices. All governments in the World Trade Organization agreed to as much, stating at Doha that "Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted." But a number of drug patent disputes are breaking out throughout the developing world, including Novartis' lawsuit seeking to overturn public health protections in India's patent law and Abbott's harsh move in Thailand to withdraw registration of new medicines. These tactics raise the question: What good are the flexibilities built into world trade law if countries will be penalized for using them?

In MSF's experience, competition and multiple producers are critical to improving access to essential medicines in most of the developing world. While segments of Thailand's population may be able to afford medicines priced at levels comparable to those charged in developed economies, the majority cannot. When companies use monopoly pricing strategies aimed at high income markets in low and middle income countries, then it is important to use patent system safeguards and flexibilities like compulsory licenses. In the words of the Doha declaration, the TRIPS agreement, which creates patent obligations on WTO members in the first place, "does not and should not prevent members from taking measures to protect public health."

Thank you.