April 26, 2007

Generic production of drugs can slash costs substantially

The Thai government's decision to bypass the patents on two Aids drugs and one heart drug, so it can offer them to all Thai citizens, is a bold move, which has put the country on a collision course with the big pharmaceutical firms.

Six years ago I visited a clinic outside Bangkok, where a locally-made pill, called V1 Immunitor, was being distributed.

The claim that it could treat HIV/Aids was widely discredited, yet the queues went right around the block.

The people waiting patiently in the Bangkok heat came from all walks of life.

There were street vendors, civil-servants and respectable-looking middle-class women - evidence of the extraordinary reach of the HIV/Aids epidemic in Thailand.

Few were under any illusions that V1 Immunitor would help them, but then what did they have to lose?

None could afford the anti-retroviral drugs (ARVs) available in Europe and the US.

To them, the HIV virus was a virtual death sentence.

Generic copies

Fast-forward six years, and nobody talks about V1 Immunitor any more. 

Affordable ARVs are now available to tens of thousands of Thais - in fact many do not pay anything at all for them, as they are provided by the government's universal healthcare scheme or by HIV/Aids organisations.

This is possible because of Thailand's decision to make cheap, generic copies of ARVs at a fraction of the cost of the branded drugs.

It is something the big pharmaceutical companies resisted at first, but then went along with.

But they are strongly resisting Thailand's latest move. Last November the new country's health minister, Dr Mongkol na Songkhla, announced he would issue what is known as a compulsory licence to manufacture low-cost versions of the HIV drug Efavirenz.

Efavirenz - which is made by the pharmaceutical giant Merck MSD, and protected by a patent in Thailand - is an alternative treatment for patients who do not respond well to the locally made ARVs.

Three months later, Dr Mongkol announced that two more drugs would be targeted with compulsory licences - the second-line ARV Kaletra, which is manufactured by the US company Abbott and is important for HIV/Aids patients showing signs of resistance to first-line ARVs - and most controversially the heart drug Plavix, manufactured by the French company Sanofi-Aventis.

Suddenly Thailand, long seen as a loyal trading partner of the US, has seen its image transformed into that of a violator of intellectual property rights.

Its decision has been condemned by the pharmaceutical industry, but applauded by non-governmental organisations campaigning for wider access to affordable medicines.

Actually what Thailand has done is completely legal under international trade regulations. 

The landmark 1995 World Trade Organisation agreement on intellectual property, Trips, gives governments a large amount of freedom to bypass patents on drugs if they face any kind of health crisis.

The language of the agreement is vague. It recommends that governments consult the drug companies first, and requires them to pay a small royalty. But crucially, the government itself can decide what constitutes a health crisis.

The drug companies have always assumed that the Trips exception would only be used for a dire emergency, like HIV/Aids or avian flu.

Issuing a compulsory licence for a heart drug, they say, breaks the spirit of the agreement.

Abbott has now withdrawn all its future products from the Thai market - including a new heat-resistant form of Kaletra which is desperately needed by HIV patients.

Healthcare for all

Dr Mongkol is quite open about his motives for challenging the patents on these three drugs.

"Our health system is in danger of going bankrupt," he said, "and one of the biggest expenses we face is the cost of drugs."

A developing country now approaching middle-income status, Thailand has very high levels of heart disease.

At Bangkok's main chest hospital, doctors say they spend almost 20% of their entire budget on Plavix, which is why it was one of the drugs targeted.

But should a developing country be allowed to fund its public health service by breaking the patents of drugs developed by multi-national pharmaceutical companies?

Thailand is one of the first countries at its income level to introduce such a service.

Richer countries like Britain have difficulty funding their health systems; Thailand, with a much lower government budget, inevitably finds it harder still.

The nationwide health scheme was first introduced in 2001 by then-Prime Minister Thaksin Shinawatra, who had a gift for coming up with populist policies that would keep getting him elected.

When he was over-thrown by a military coup last September, the new government, needing to shore up its own legitimacy, went even further and eliminated the nominal charge for treatment.

It was encouraged in this by Dr Mongkol, who suddenly found himself promoted to becoming a minister after 40 years fighting for better health care as a career civil servant in the Ministry of Health.

Supporters of the compulsory licences, like Paul Cawthorne from Medicins Sans Frontiers, believe Thailand's bold step is the right one.

He argues that the big pharmaceutical companies make plenty of money from less essential drugs, like Viagra, and that they spend a lot more on advertising their products than they do on research and development.

Much of the research in the US is, in any case, done by government-funded universities, he says.

He is calling for a radical shake-up in the pricing of a whole range of essential drugs, to make them affordable in every country - and he believes Thailand has set an example other governments should follow.

Opponents argue that governments cannot feel free to break the patents on any drugs they choose, just to fund cheap healthcare for their citizens.

That, they say, destroys the incentive to develop new drugs.

Backing down?

But the situation varies enormously from country to country.

Until recently India, for example, did not recognise the patents of multinational drug companies, and has built up a huge industry making cheap generic drugs without incurring the wrath of the industry.

Because Thailand went along with patent protection many years ago, it is being criticised for following India's example.

Indeed, some of the cheap drugs Thailand now wants to give its patients are actually imported from India.

Tellingly the US, normally a vocal defender of intellectual property rights, has not criticised Thailand's decision, nor has the World Health Organization.

The drug companies are also showing signs of flexibility, offering significant price cuts to Thailand.

Even Abbott, which has taken the most hardline stand, is under great pressure to reverse its decision to pull future products from the Thai market.

Whatever the rights and wrongs of Thailand's drugs pricing policy, it looks as though Dr Mongkol is starting to win his battle for affordable healthcare.