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 BANGKOK 00001269 002 OF 002 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.