MORE COMPULSORY LICENSES LIKELY FOR THAILAND

UNCLAS SECTION 01 OF 03 BANGKOK 000527

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: MORE COMPULSORY LICENSES LIKELY FOR THAILAND

REF: SECSTATE 9256


1. (SBU) Summary: The Minister of Public Health announced his
intention to issue further compulsory licenses next week for
HIV/AIDS medicines and heart medicine. Similar to its earlier
compulsory license on another HIV drug last November, the Ministry
did not discuss or negotiate with patent holders before making the
announcement. Local industry is disturbed that the Ministry is
considering licensing not only AIDS drugs but is moving toward
breaking patents on other, more profitable therapeutic medicines and
is considering changes in their investments in Thailand. End
Summary.


2. (SBU) On January 24, Minister of Public Health Mongkol na
Songkhla announced to the press his Ministry's intention to issue
compulsory licenses on three patented drugs, two for HIV treatment
and another for heart disease. The Minister withheld further
details until an official announcement could be made on Monday,
January 29. The Minister's statement follows on the compulsory
license announced last November for efavirenz, an HIV medicine
patented by U.S.-based pharmaceutical company Merck & Co. Although
Mongkol did not identify the drugs to be licensed in this round, we
understand they will be Kaletra, an antiretroviral produced by
U.S.-based Abbott Labs, and one of its component drugs, probably
ritonavir; and Plavix, a heart medicine produced jointly by French
firm Sanofi-Aventis and U.S.-based Bristol Myers Squibb (but
distributed by Sanofi Aventis in Thailand). The RTG was also
reportedly considering Pfizer's anti-cholesterol statin Lipitor, but
is now looking into similar drugs that are already off patent as an
alternative to breaking patents.


3. (SBU) The RTG intention to compulsory license Kaletra was
unsurprising, health activists in and out of the government have
long expressed a desire to find a cheaper version of this expensive
second-line antiretroviral. The RTG has committed to expand
treatment to more HIV/AIDS patients and as a percentage of those
patients inevitably develop resistance to first-line generic
regimens, there will be both an increasing number and proportion of
patients who require second-line drugs such as Kaletra. Health
officials have long expressed their fears that the commitment to
treatment will stretch health budgets and possibly place at risk the
financial situation of the entire universal health coverage system.


4. (SBU) Entry into other therapeutic medicines such as the heart
medicine Plavix opens a new front. Reportedly, an interagency
committee on compulsory licenses met January 8 and developed a
target list of drugs in four disease categories for potential future
compulsory licenses. In addition to cardiovascular drugs Lipitor
and Plavix and the HIV drug Kaletra, the committee listed four
cancer drugs and two antibiotics. The committee recommended Kaletra
and Plavix be next in line to be licensed, but it is unclear what
timeline the others may follow.


5. (SBU) According to one member of the compulsory license
committee, the Ministry of Public Health (MoPH) will follow a
similar procedure to that done with efavirenz. The Department of
Disease Control will issue the license for Kaletra, while the
Department of Medical Services will handle the process for Plavix.
Both agencies have been instructed to send official letters of
notification to the Department of Intellectual Property and to the
patent holder once the compulsory license has been officially
announced. The committee does not believe cabinet approval is
necessary for this round of compulsory licenses and it does not
appear to have been discussed at that level.

ACTIVIST OFFICIALS DRIVING MORE CL'S
--------------


6. (SBU) The step to issue compulsory licenses is increasingly seen
as a populist move by the military-installed government. In a new
government that is still feeling its way on how to govern, Mongkol
is an activist Minister who has seen an opportunity to make a bold
step forward in improving access to medicine with little opposition
from other parts of the government. A relatively small group of
people is driving the compulsory licenses. Dr. Sanguan
Nitayaramphong, Secretary General of the National Health Security
Office which manages the universal health care program and chairman
of the interagency committee on compulsory licenses, apparently
began the process of identifying which drugs to consider for
compulsory licenses. However, the main actor behind the process is
considered to be Dr. Suwit Wibulpolprasert, Special Advisor on
Health Economics at the MoPH. Suwit had been an opponent of

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pharmaceutical provisions in the proposed US-Thai FTA. Dr. Suwit
also this week spoke before a WHO Executive Board meeting in Geneva
railing against pharmaceutical firms that use virus samples from
Thailand to produce vaccines, but sell it back at unfair prices,
saying "when the pandemic occurs, they survive and we die". HHS is
reportedly drafting a strong response.


7. (SBU) The expected spiraling financial outlays for HIV treatment
and other medical care is an obvious motive for proceeding ahead
with compulsory licenses, but less clear is why the MoPH has
declined to negotiate or seriously discuss with pharmaceutical firms
before issuing the licenses. Dr. Sanguan and Dr. Suwit have each
said privately and publicly that they had undertaken negotiations
with the pharmaceutical firms and had made little progress, thus
necessitating moving forward with the licenses. The pharmaceutical
firms, on the other hand, insist they never entered into any formal
negotiations or discussions, though they have not publicly
challenged the RTG on this point. An executive VP of Sanofi-Aventis
reportedly met with Minister Mongkol yesterday and offered to
discuss prices on their antiplatelet agent Plavix, but asked that a
CL not be issued as it would compromise their ability to negotiate
later. The Minister responded positively, but nevertheless notified
the press only hours later that the license would go ahead (the
Minister reportedly told Sanofi today he had not made the statement
and that there had been a leak, but somehow most Bangkok papers
sourced the information directly to him). The local office of
Abbott Labs has requested a meeting with the Minister as well, but
the request was pushed down to the Department of Disease Control
whom they will meet on Friday.


8. (SBU) The local industry pharmaceutical association, Prema, is
reacting strongly to the move to issue licenses for not just
HIV/AIDS drugs but other therapeutic medicines. Prema issued a
strongly worded press release today that expressed their alarm and
suggested that a number of major firms will be reexamining their
investment strategies in Thailand. The statement aims to raise
concerns over the already battered investment climate in Thailand.


9. (SBU) Ambassador Boyce lunched with PM Surayut on Wednesday and
brought up the compulsory license issue, noting that consultation
with affected firms was important for transparency. Surayut
appeared to be familiar with the issue and while not offering
comment on it said he would bring it up with the Minister of Public
Health. The Ambassador also brought up the issue in his meeting
today with Foreign Minister Nitya (reported septel).

Update on individual CLs
--------------


10. (SBU) Merck has heard that MoPH has ordered 66,000 bottles of a
generic version of their drug efavirenz from Indian generic Ranbaxy,
and that the first shipment should be arriving the second week of
February. The Government Pharmaceutical Organization (GPO)
apparently was able to procure the generic for 700 baht per bottle
(a one-month supply),approximately 180 baht less than Merck had
been able to offer. Thai FDA has approved the 200 mg version of
generic efavirenz and will soon approve the more common 600 mg
version. Merck believes they are still in discussions with the RTG
and may be able to present further price reductions.


11. (SBU) Abbott Labs has heard that the RTG is considering
importing generic versions of its antiretroviral Kaletra from either
Indian generic Cipla or Hetero. Abbott does not believe that the
WHO has qualified the generic from either company. Abbott also
expects to complete the registration process in March for a new
heat-stable version of the drug which does not require
refrigeration. The new version has a reduced pill count (4 instead
of 6 per day) and no dietary restrictions. Abbott is uncertain
whether a CL on Kaletra would cover its new version as well, but
noted that no generic companies have yet to produce the new
version.


12. (SBU) Comment: Although we have been critical of the process
the RTG has followed on issuing compulsory licenses, providing cheap
antiretrovirals to poor AIDS patients is certainly a worthy goal.
However, we and industry are concerned that a new front has opened
and Thailand now seems to be moving to break patents on drugs simply
because they are highly priced, and not necessarily for diseases
that afflict the poor. Embassy would appreciate any guidance on
whether compulsory licenses on drugs not intended to treat pandemic
diseases are treated differently under WTO TRIPS regulations. We
would also appreciate any guidance on whether points provided in

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reftel have changed given today's new information.
BOYCE