RTG DEFENDS COMPULSORY LICENSES, INDUSTRY CONSIDERS

UNCLAS SECTION 01 OF 02 BANGKOK 001269

SIPDIS

SENSITIVE

SIPDIS

STATE PASS USTR FOR B. WEISEL, C. WILSON
STATE PASS USPTO
HHS/OHGA FOR AMAR BHAT, ERIKA ELVANDER
USDOC FOR JKELLY

E.O. 12958:N/A
TAGS: ECON ETRD KIPR TH
SUBJECT: RTG DEFENDS COMPULSORY LICENSES, INDUSTRY CONSIDERS
OPTIONS


1. (U) Summary: The RTG issued a white paper defending its use of
compulsory licenses and stated that it will continue their use.
Industry attempted to open a dialogue with the Ministry of Public
Health to head off future actions, but met antagonism by health
officials who hold the industry in low regard. Officials were
interested in little that industry could offer other than lower
prices for their products. Companies affected by the compulsory
licenses are still considering what legal options are available to
challenge their issuance, but have otherwise hit a dead end on how
else to proceed. Public health officials have lost none of their
fervor for compulsory licenses, but it is unclear they will be able
to push future licenses through the cabinet. End Summary.


2. (U) On February 16, the RTG Ministry of Public Health (MoPH)
released an 80-page white paper explaining their decision to issue
compulsory licenses to override patents on three pharmaceutical
products in Thailand. The paper justified the actions on the RTG's
limited health budget and the need to ensure access for Thai
patients to all drugs on the country's National List of Essential
Medicines (NLEM). The paper states that compulsory licenses will
continue and sets out three criteria for choosing medicines: 1)
drugs must be on the NLEM; 2) must be necessary for solving a health
problem in the country; and 3) have a very high price (undefined).
The government will pay royalties of .5 or two percent of sales for
drugs of high and low volume, respectively.


3. (U) A MoPH report to the Prime Minister identified ten other
drugs that the Ministry has considered for future CLs, including two
antibiotics and eight drugs to treat heart disease and cancer. Some
press reports mentioned consideration of Bristol-Myers Squibb's
antiretroviral atazanavir as well, though the drug is not listed on
the NLEM and would presumably therefore not be eligible. The report
gave no timeline for any future CLs and it is not clear how
thoroughly the Ministry reviewed the list of potential CLs. Several
of the drugs listed have expired patents, and at least one was never
patented in Thailand.


4. (U) The local pharmaceutical association, Prema, met with MoPH
Minister Mongkol Na Songkhla on February 19 and presented a proposal
for a joint committee between Prema and MoPH that they dubbed the
Thailand Health Access Initiative (THAI) Consultative Forum. For
anti-trust reasons the committee would not discuss pricing, but
could discuss technology transfer issues and philanthropic
activities to work on neglected diseases, donate medicines and
improve delivery to difficult to reach areas of Thailand. Prema
said the revocation of CLs would not be a condition for
establishment of the committee, but would be an item for
consideration.


5. (U) MoPH roundly rejected the idea and participants in the
meeting said they were shocked by how vehemently the Minister
reacted. MoPH officials present blasted the proposal as little more
than a delaying tactic and insisted the only proposal they would
accept from industry would be a list of which drugs they would
reduce the price and by how much. Dr. Mongkol roundly criticized
the industry as a whole. The Minister was reportedly an
enthusiastic reader of a recent anti-pharma book, "The Truth about
the Drug Companies", and frequently cites arguments from the book to
justify the CLs. In a press interview, Dr. Mongkol conceded that
last year's coup gave him the chance to act, and that a "true
politician" would not have pursued his CL policy, fearing the
consequences. Mongkol continued, "I am not a politician, and I have
nothing to lose."

RTG walling itself off
--------------


6. (U) The Ministry of Commerce rebuffed an Embassy request for
Ambassador Boyce to meet with Minister Krirk-krai to deliver a
letter from Commerce Secretary Gutierrez regarding CLs. In the end,
Econ Counselor and Commercial Counselor met with Deputy DG Srivicha
Rackchamroon, who politely agreed that economic times were in fact
difficult, but had little else to say.


7. (SBU) EU representatives are requesting Brussels' approval for a
demarche on the CL issue. Proposed points express the EU's surprise
that CLs were extended to products beyond those used for epidemics
and seeks clarification on Thai policy, including the types of
medicines/diseases that would be covered by CLs, the duration of the
use of CLs and the circumstances which justified their use. The
points also express concerns over the lack of consultation with
industry. Unfortunately, MOPH informed the EU that Dr. Mongkol

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would be busy for the entire month of March; the Ministry of
Commerce has yet to respond to their appointment request either.
For their part, the Swiss Embassy has taken no action and has no
plans to do so, citing an absence of complaints from Swiss
pharmaceutical companies.


8. (U) Industry was briefly buoyed by reports that WHO Director
Margaret Chan had criticized Thailand's CL policy, telling the press
after a meeting with Dr. Mongkol that there had to be a right
balance for compulsory licensing. However, only days later Chan
wrote Mongkol that the WHO supported the use of TRIPS flexibilities,
and clarified that her statements should not be taken as a criticism
of the RTG's decision, though she believed industry was still part
of the solution to high health costs.

Companies mull their legal options
--------------


9. (SBU) Merck & Co., whose antiretroviral efavirenz was hit by a
CL last November, filed an appeal with the Department of
Intellectual Property on February 12, challenging the RTG decision.
The press has reported that the appeal was rejected, but Merck has
yet to receive an official response. Although still considering
themselves in talks with the RTG, they are not hopeful for a
negotiated resolution. Merck says they delivered their final offer
to MoPH on February 6, offering a price still above that of the
comparable generic. They have received no formal response. MoPH's
white paper revealed that generic efavirenz has been certified and
registered with the Thai FDA and the first order has already entered
the country, though Merck says they have not seen generic product
enter distribution channels. The Government Pharmaceutical
Organization (GPO) recently contacted Merck regarding payment of
royalties for the purchases.


10. (SBU) Abbott Labs, target of a January CL /n their
antiretroviral Kaletra, has yet to make a final decision on whether
to take legal action. In contrast to Merck, Abbott has yet to
proffer a reduction in price to head off the CL and has not actively
pursued negotiations. Abbott's lawyers are prepared to file a
series of appeals with the Ministry of Public Health's Department of
Disease Control, the actual isster of the CL on Kaletra. If the
appeals are unsuccessful, Abbott could then bring a case to the
Intellectual Property court to determine the CL's legality.


11. (SBU) Paris-based Sanofi-Aventis, maker of the anti-clotting
agent Plavix and another target of a CL, has also declined to
negotiate and has not offered a reduction in price. Sanofi has yet
to take legal measures but consider all options to be open at this
time.

Purging GPO
--------------


12. (U) On February 28, the RTG cabinet dismissed GPO Managing
Director Mongkol Jivasantikarn, in part because of an apparent lack
of enthusiasm for GPO's role in issuing CLs and producing generic
versions. Press reports cited a personal row with GPO board
chairman Vichai Chokewiwat, a vocal booster of CLs within the RTG.
Vichai declined to disclose the reasons for Mongkol's dismissal,
noting only that the decision had been approved by GPO's directors.
Industry reps say that MOPH officials considered the GPO Director to
be a holdover from the previous administration and had been seeking
a reason to oust him.


13. (U) Comment: Industry has thus far been unable to coordinate a
common approach to the RTG's CL policy and actions have been
haphazard. Efforts by individual companies to negotiate or
challenge the CLs have not produced results, and the tentative
attempts to approach the RTG as an industry have met with outright
hostility. MoPH officials have lost none of their ardor for CLs,
but it is unclear whether the rest of the RTG has the stomach for
yet more controversial economic decisions. Top RTG officials have
mentioned that any future CL decision be considered first by the
cabinet, and approval is not assured. After a long series of
economic missteps and the recent high-profile resignation of Deputy
PM Pridiyathorn, cabinet officials may be more interested in keeping
controversy to a minimum. End Comment.