Abbott Laboratories announced that it will not launch new medicines in Thailand in response to the military-installed government’s decision not to honor the company’s patent for an AIDS drug.  On January 29th 2007 the Thai Ministry of Public Health announced that it would issue compulsory licenses for Kaletra and for Plavix, an anti-platelet medication that reduces the risk of unstable blood clots in people with heart disease.

Abbott confirmed that it will not seek licenses for seven new products in Thailand, in retaliation for the Thai government’s decision to issue a compulsory license for the HIV protease inhibitor Kaletra (lopinavir/ritonavir). The products will include a new heat-stable version of Kaletra, called Aluvia, which would be highly desirable in the Thai climate. This will not affect medicines that are already available in Thailand.

Thailand provides antiretroviral medicines for a nominal fee to all HIV-positive citizens who can’t afford to buy the drugs And the compulsory license will allow the Thai government to import generic versions of Kaletra from India in order to save money.

Thailand’s health officials said issuance of compulsory licenses was justified under international trade rules because the drugs’ high cost constituted a crisis for the country’s health sector. More than 500,000 people in Thailand are living with HIV, according to UNAIDS, the United Nations agency that coordinates the global fight against the deadly virus.

According to a statement by the AIDS Healthcare Foundation, Abbott was willing to cut $200 off the $2,200 per patient annual cost of Kaletra. It is estimated that with Thailand’s compulsory license a generic version of Kaletra can be produced for about $1,000 per patient.

This is the first time a government has invoked so-called compulsory licensing to treat an ongoing health problem. The licensing is invoked by the state in the case of a drug being needed to save lives in emergency situations, previously reserved for extremes such as wars and pandemics. Drug companies are concerned the move will set a precedent for other nations.

The real issue is that the TRIPS agreement of 1994 does not require a public health emergency to be declared and does not require the Thai government to negotiate with manufacturers before issuing a compulsory license if the use is not for profit.

The government said it decided on compulsory licensing because it’s concerned about Thai lives and wants to increase the availability of drugs to low-income patients. The reality, however is that this is not a situation that the drug is not available, it’s that the Thai government just doesn’t want to pay full price.

The World Trade Organization’s Doha Declaration on the TRIPS Agreement and Public Health, an amendment to the WTO’s TRIPS agreement on trade-related intellectual property rights, adopted by the WTO Ministerial Conference in November 2001, affirms that the TRIPS Agreement should be interpreted and implemented so as to protect public health and promote access to medicines for all. The Declaration gives the right of WTO Members to make full use of the safeguard provisions of the TRIPS Agreement to protect public health and enhance access to medicines.

The WTO Declaration explicitly states that “intellectual property protection is important for the development of new medicines” and member countries made an unequivocal point of “reiterating our commitment to the TRIPS Agreement.” Furthermore, the WTO members agreed to address the HIV/AIDS pandemic while “maintaining our commitments in the TRIPS Agreement.” Article 31 (f) of the TRIPS Agreement stipulates that a compulsory license must be issued predominantly for the supply of the domestic market of the Member granting the license.  Anti-retroviral virus treatment for HIV was the main impetus for this initiative.

On its face, this seems like a good outcome for people to access to cheap or free medicines. However, nothing in life is ever free and trying to kill the goose that laid the golden eggs will only bring short-term gain with long-term pain.

Pharmaceutical companies rely on government-granted patents to protect their huge investments in researching and developing new drugs. It takes 10-15 years and costs $800 million on average to bring a new medicine to market. If some countries try to break patents to get out of paying, guess who’s going to foot the bill?

Kannikar Kijtiwatchakul, a campaigner in Thailand for Doctors Without Borders, told the AP the government’s move was “a brave decision, despite both anticipated pressure from industry and possible threats to withdraw investments. The authorities have engaged in dialogue with companies before, but the discounts have been marginal.”

Well, my math may be wrong but Abbott sells a year-long supply of Kaletra to Thai patients for $2,200, less than half the $7,000 that the drug costs patients in the U.S., according to Abbott. Admittedly, Abbott sells the drug at an even-deeper discount, $500 a person a year, in certain countries in Africa, including Malawi and Kenya but offering to drop the price from $7000 to $2000 doesn’t sound like “the discounts have been marginal.”

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8 Comments

  1. I’ve also been following this issue – you provide a very good review of the issue to date. May want to also see what Brazil has done – they’re in a very similar development stage and AIDS prevalence as Thailand, and were the first to issue compulsory licenses for AIDS medications.

    One interesting thing is the failure of the generic ARV GPO-Vir World Bank project in Thailand. The World Bank tried to help Thailand help themselves by investing $US133 million to develop and manufacture GPO-Vir. Through corruption, this money was mostly squandered. A clinical test of the drug’s effectiveness was conducted during the summer of 2006. The results were that the GPO-Vir drug was causing Thai patients to have accelerated resistance, speeding HIV along rather than slowing it. The World Bank was appalled, pulled funding, the coup happened, and now, the military gov’t is trying to cover up this GOP-Vir corruption failure. What better way to do it than draw all this negative attention to Abbott?

  2. […] This week, Patent Baristas have an excellent (as usual) post on Abbott Labs’ ongoing conflict with the government of Thailand. This unfortunate situation illustrates some key difficulties in getting expensive pharmaceuticals to impoverished populations. It’s tough when public health and free enterprise collide – it sometimes makes me glad that I’m just a biologist. […]

  3. If some countries “don’t” break the patents (if thats even the appropriate language, since it is allowed (not breaking) under the treaty) guess who’s gonna pay? Not anyone reading this blog, because chances are the access to the internet proves your wealth status. I appreciate the coverage of this issue, but I disagree with the position that Abbot is being harmed here. Maybe the CEO’s of all the pharma’s could take a pay cut to afford some access to life-saving drugs. Finally, “free enterprise” … ha! Thats a good one.

  4. […] Abbott Gets Tough with Thailand In response to Thailand’s decision to issue compulsory licenses for Kaletra and for Plavix, effectively bypassing their patents by purchasing generic versions from India, Abbott has responded by redusing to launch any new drugs in Thailand. […]

  5. Would other countries use this as an excuse?? Sounds like a good escape route, if the government wants it.

  6. […] Abbott Laboratories announced that it would not launch new medicines in Thailand in response to the military-installed government’s decision not to honor the company’s […]

  7. Your number for the cost of developing a new drug, often quoted in arguments like yours, is both misleading and inaccurate. Pharmaceutical companies have inflated this number by conflating costs for marketing research with those costs incurred for the actual biomedical research needed to develop a new drug. The actual cost for developing a drug, with only biomedical research included on the tab, is on average around $200 billion, or roughly a quarter of the number you’ve put up in this post.

  8. re Costs of Drug Development:

    I agree that it is difficult to accurately assess the total costs for drug development. A study by the Tufts Center for the Study of Drug Development showed the average cost of developing a new prescription drug was $802 million in 2001, more than double the cost in 1987.

    However, some consumer groups argue that the study “ignores the fact that some of the drug development costs are tax deductible and that some of the research is subsidized by the government through NIH” (New York Times, 12/1/01). They also argue that the study “focused too much” on new drugs when many treatments that reach the market each year “are updated versions of existing medicines.”

    In addition, the $802 million figure includes $403 million that a pharmaceutical company might lose by “not having invested in something more reliable” than “risky” drug development, which advocates said “should not be figured” into the cost of drug development (AP/Nando Times, 11/30/01).

    Ed.