A US Free Trade Agreement could threaten access to medicine in Thailand

Oxfam | April 2006

by Gawain Kripke and Stephanie Weinberg

Summary and recommendations

Even though the world faces the threat of potential new epidemics like avian
influenza, the effects of trade rules on public health attract little attention.
Governments recently reaffirmed their commitment to meet the Millennium
Development Goals which include combating HIV/AIDS, malaria and other
major diseases, yet little attention is given to the implications of United States Free Trade Agreements (US FTAs) with developing countries such as
Thailand, for access to affordable medicines to treat those diseases. These
FTAs do much more than regulate tariffs for cross-border trade in goods and
services: they change the rules of intellectual property protection in ways that
will undermine public health by limiting access to affordable medicines.

This report seeks to draw attention to the potential effect on access to
medicines of new intellectual property rights protections in US FTAs. It is part
of Oxfam’s broader critique of trade rules in FTAs that have adverse effects
on development and poverty reduction.

Thailand is a positive example of a developing country that has created
effective programs to address the HIV/AIDS epidemic, having invested in
prevention and treatment early on. More than 1 million women, men, and
children have contracted HIV in Thailand and more than 500,000 people
have died of AIDS since the outbreak of the epidemic. Thailand’s prevention
efforts, which helped avoid more than 5 million new infections, are widely
recognized as a success story among developing countries. Nevertheless,
there are still around 20,000 new infections each year, with half of new adult
infections occurring among women.

By preventing a much larger epidemic, Thailand avoided much larger
treatment costs. For every baht invested in prevention and treatment in the
1990s, Thailand saved 43 baht in added treatment costs. In 2000 the Ministry
of Public Health created the National Access to Antiretroviral Program for
People Living with HIV/AIDS (NAPHA), providing a wide range of triple-drug
antiretroviral (ARV) therapy. Two years later, the Government
Pharmaceutical Organization (GPO) began producing its first ARV triple drug
’cocktail’ called GPO-vir for 1,200 baht ($ 31) per patient per month,
compared with 18,620 baht ($ 490) for imported, brand-name drugs.

As a result of these efforts, the Thai government has been able to provide
ARV drugs to increasing numbers of people who need them. The most
important factor making this possible has been the government’s ability to
procure inexpensive generic drugs. With the introduction of GPO-vir, the
HIV/AIDS treatment program was expanded more than eight-fold from 2001-
2003 with only a 40 per cent increase in budget. Thanks to the availability of
these generic medicines, the government is able to offer life-saving HIV/AIDS
medicines to approximately 80,000 people,with plans to expand the program
in coming years.

But as Thailand maintains and scales up treatment of people with HIV/AIDS,
there is trouble on the horizon. Over time, increasing numbers of Thailand’s
population with HIV/AIDS will need access to ’second-line’ ARVs, because
viruses typically develop resistance to drugs after a period of time, and
treatment with ’first-line’ regimens will eventually fail. Local production of
GPO-vir is legal because these first-line drugs were invented before Thailand
introduced patent protection for medicines in 1992 and, therefore, they could
not be patented in the country. However, second-line therapies were
developed more recently and are patented in Thailand, where they cost, on
average, 14 times more than first-line treatments.

Thus, the future of treatment program in Thailand could be threatened if the
United States succeeds in pressuring the Thai government to accept
stringent new drug patent and marketing rules during FTA negotiations. US
pressure to strengthen intellectual property protection is not new in Thailand:
it dates back 20 years and includes denying trade preferences under the US
General System of Preferences in 1989 and 1991. Facing intense pressure,
Thailand amended its existing patent law in 1992 to allow patents on
pharmaceuticals, and extended patent life from 15 to 20 years. The law was
amended again in 1999 to comply with the WTO Agreement on Trade
Related Aspects of Intellectual Property Rights (TRIPS).

As permitted by TRIPS, the Thai patent law currently allows flexibilities that
help lower the price of medicines, such as compulsory licensing, which
allows the government to override a patent to meet public health needs.
According to a recent World Bank report, ’...by exercising compulsory
licensing to reduce the cost of second-line therapy by 90 per cent, the Royal
Thai Government would reduce its future budgetary obligations by 3.2 billion
discounted dollars (127 billion discounted baht) through the year 2025.’

But it is likely that provisions in a US-Thailand FTA would limit the
government’s flexibility to issue compulsory licenses, and would create a
number of other obstacles to production and marketing of generic drugs.
These new intellectual property rules exceed Thailand’s obligations under
TRIPS and could undermine the country’s ability to provide affordable ARVs
and other medicines to its population.

The US proposal on intellectual property rights for medicines in the US-
Thailand FTA includes provisions similar to those in other US FTAs. In some
cases, provisions are stronger than in most previous agreements and
include, for example, extension of the patent term, protection of test data, and
linkage between marketing approval and patent status. Additional provisions
that have been included in some previous US FTAs, such as restrictions on
the grounds for compulsory licensing, expansion of the patent scope, and
limits to challenging potentially invalid patents, will further limit the use of
important existing flexibilities in drug patent and marketing rules. The
incorporation of these so-called ’TRIPS-plus’ rules into this FTA could
seriously hamper Thailand’s HIV/AIDS programs, thus depriving thousands
of people of effective treatment.

Oxfam recommends that no intellectual property provisions beyond the
commitments established in TRIPS be included in any trade agreement
between the United States and developing countries, such as Thailand.
US-Thailand FTA negotiations should be halted in order to carry out and take
into account independent studies on the potential impact of proposed
provisions on public health. Any future negotiations should involve greater
transparency, including public disclosure of the negotiating text, and should
take into account concerns and proposals of civil society stakeholders. In
negotiating any trade agreement with the United States, Thailand should
ensure that it can maintain and enact laws and create policies which uphold
the right to public health and which promote broad access to safe, effective
and affordable medicines. No trade agreement should negotiate away public
health.

source: Oxfam