This record is a partial extract of the original cable. The full text of the original cable is not available.

070340Z Feb 06

UNCLAS SECTION 01 OF 04 BANGKOK 000712 
 
SIPDIS 
 
DEPARTMENT PASS USTR FOR BWEISEL 
 
E.O. 12958: N/A 
TAGS: ETRD TH
SUBJECT: PROPOSED FACT SHEET ON FTA AND MEDICINES PRICES 
 
REF: BANGKOK 000689 
 
 ¶1.  This is an action request -- para 4. 
 
¶2.  As noted in reftel, the issue of the proposed US-Thailand 
FTA and that agreement's potential effect on medicines 
pricing -- particularly for drugs used in the treatment of 
HIV/AIDS -- in Thailand has emerged as the single most 
controversial part of the FTA.  Anti-FTA forces argue that 
the US request for enhanced IP will result in higher 
medicines prices, resulting in decreased access to medicines 
in Thailand.  We believe these charges, if left unchallenged, 
have the potential to turn Thai public opinion against the 
FTA and effectively kill it.  While the Embassy and USTR 
officials have addressed the IP/medicines pricing issue on 
several occasions in Thailand, more needs to be done. 
 
¶3.  Working with local Pharma representatives, we have 
prepared a "Fact Sheet" with accompanying Q's and A's on this 
subject.  We propose to use this document as a key component 
of an aggressive public outreach campaign over the next 
several weeks. 
 
¶4.  Action Requested -- Washington agencies are requested to 
review and clear the Fact Sheet/Q's and A's below, for use by 
Embassy in its public outreach efforts in Thailand. 
 
¶5.  Begin Document 
 
Patents, Pharmaceuticals and the FTA -- A Fact Sheet 
 
One of the most controversial items in the proposed 
U.S.-Thailand Free Trade Agreement is patent protection for 
pharmaceutical products.  The provisions are complex and have 
given rise to a number of misunderstandings about how an FTA 
would affect prices and access to medicines in Thailand. 
 
What,s in an FTA 
 
Patent Term Adjustment:  Both Thailand and the United States 
grant patents for a length of twenty years, and that term 
will remain unchanged after an FTA.  However, the FTA states 
that the patent term of an innovative new product can be 
lengthened to compensate for &unreasonable delays8 that 
occur in the process of granting of the patent or market 
approval.  For example, an &unreasonable delay8 of one year 
would result in an extra year of patent protection.  The 
purpose of this provision is to ensure that pharmaceutical 
and other companies have sufficient time to recoup the 
expenses incurred in developing their products. The average 
cost of developing a new medicine has been estimated at $800 
million.  It is in the interest of all, including industry, 
hospitals and patients, to avoid these unreasonable delays 
and speed to market life-saving drugs.  Adequate resources 
for the Thai Patent Office and the Food and Drug 
Administration would ensure that applications for patents and 
market approval were reviewed quickly and thoroughly and that 
no patent term extensions for unreasonable delays would be 
necessary. 
 
Data Exclusivity:  To obtain market approval for a new drug 
in Thailand, a pharmaceutical company must submit clinical 
test data to the Thai Food and Drug Administration to show 
that the drug is both safe and effective. An FTA would 
require that each country protect this data from disclosure 
or unfair use for at least five years after the drug has been 
approved.  Data exclusivity is a different form of protection 
than a patent in that it protects only the data, not the 
product.  Under the FTA, generic competitors would still be 
able to obtain market approval for a generic copy of a drug 
that is not under patent, but would need to submit their own 
safety and efficacy data and not rely on the data of the 
original drug manufacturer for at least five years. 
 
It is important to note that the five years of data 
exclusivity does not add on to a drug,s patent term, rather 
it runs concurrently with the patent period, starting from 
the date of market approval in Thailand.  In most cases, the 
data exclusivity term would begin and end while the drug was 
still under patent and would not affect when or whether the 
drug could be produced generically.  It would only be of 
value to a drug company for products that have less than five 
years of patent protection remaining at the time of market 
approval, or for products for which patents were never 
issued.  In these rare cases, the data exclusivity provisions 
ensure that companies have at least some period of market 
exclusivity. 
 
Compulsory licenses:  Under WTO rules, a member country is 
authorized to produce a patented drug, with or without 
permission from the patent holder, in cases of public health 
emergency, anti-competitive practices by the right holder, or 
for public non-commercial use.  An FTA would not restrict 
Thailand from issuing a compulsory license for these reasons, 
provided that the patent owner was given reasonable 
compensation. 
 
Tariff reduction:  Thailand currently maintains a ten percent 
tariff on imported pharmaceutical products, with exceptions 
for vaccines and drugs to treat HIV/AIDS, malaria, and 
thalassaemia.  An FTA would eliminate tariffs on drugs 
imported from the U.S. and could potentially result in 
significant price reductions across the board. 
 
The FTA and anti-HIV/AIDS drugs 
 
The antiretroviral drugs used to treat most HIV/AIDS patients 
in Thailand are not patented, and generic copies are produced 
domestically and available for sale.  The most well known 
generic is GPO-vir, a combination of three off-patent drugs 
produced by the Government Pharmaceutical Organization.  Some 
other antiretrovirals, including drugs used for patients who 
have built up resistance to GPO-vir or have experienced side 
effects, remain under patent and are substantially more 
expensive than generic products. 
 
An FTA would not increase the prices of drugs in Thailand, 
including antiretrovirals.  Drugs that were off patent would 
continue to be so, and generic drugs would continue to be 
produced as before.  There are no provisions in the FTA that 
would encourage a pharmaceutical company to increase the 
prices of their products after an FTA were signed.  Rather, 
the issue is one of whether prices would fall as quickly as 
they would otherwise were there no FTA and were more generic 
competition. 
 
For most antiretrovirals the FTA provisions listed above 
would have no effect on price or access.  With regard to 
patent term adjustment, the Thai Patent Office and the Food 
and Drug Administration recognize the importance of 
antiretrovirals to saving lives in Thailand and are committed 
to providing rapid approval for new drugs.  It would be very 
unlikely for &unreasonable delays8 to occur in granting 
patents and marketing approval for a new antiretroviral, and 
therefore little chance for an extension of the patent term. 
 
Data exclusivity provisions would likely have no impact as 
new antiretrovirals are almost certain to be patented in 
Thailand.  As mentioned above, data exclusivity runs 
concurrently with the patent period and the five-year period 
usually ends before the patent ends.  A generic firm wishing 
to copy a new antiretroviral would have to wait until the 
patent term ended before producing their own version, and 
would not be impacted by the unavailability of the clinical 
test data for that five-year period of data exclusivity. 
 
The option of issuing a compulsory license for production of 
a patented antiretroviral would continue to exist for 
Thailand.  The U.S. stands by the commitment it made in the 
WTO round in Doha in 2001, affirming that intellectual 
property rules should not prevent WTO members from taking 
appropriate measures to protect public health. 
 
Many patented antiretrovirals are sold in Thailand at steep 
discounts, with some being provided on a no-profit basis by 
the companies that developed them.  For some drugs it is 
unlikely that a generic copy would be any cheaper than the 
original drug being sold today.  Other patented drugs are 
more expensive, but once the patent term ends generic 
manufacturers would be freely able to manufacture and sell 
cheaper generic versions without restrictions. 
 
Questions and Answers 
 
Q:  Why is the U.S. seeking &TRIPS-plus8 protection for 
intellectual property that is not required by the WTO? 
 
A:  WTO rules provide an excellent base for protection of 
intellectual property, but they provide general guidelines on 
IP protection, rather than detailed rules on how intellectual 
property should be protected.  Many innovative industries, 
including pharmaceuticals, face particular difficulties in 
generating intellectual property which are not fully 
accounted for in the WTO rules.  For this reason, countries 
that have an interest in promoting innovation have put more 
detailed rules in place to encourage ongoing research and 
development in these industries.  Ultimately, these rules 
benefit companies and consumers because they promote ongoing 
research and encourage the development of new, innovative 
products, including new medicines. 
 
Q:  Would an FTA raise prices of pharmaceuticals, including 
drugs to treat HIV/AIDS? 
 
A:  There are no provisions in the FTA that would cause a 
pharmaceutical company to raise the prices of their products. 
 If we examine the likely overall effects of the FTA on 
pricing, prices of medicines would fall since the current ten 
percent tariff on imported pharmaceutical products would be 
eliminated. 
 
Q:  Would an FTA ban the use of generic copies of essential 
drugs in Thailand? 
 
A:  No, every generic drug on the market today would still be 
available as a generic after an FTA were signed with the U.S. 
 Generic drugs are currently able to enter the market after 
the patent on the original drug expires, and this will not 
change after an FTA.  There are provisions in the FTA that 
could in theory delay the entrance of some new generics, but 
current, longstanding Thai Government policies make such an 
outcome highly unlikely. 
 
Q:  Would an FTA extend patents on drugs from 20 to 25 years? 
 
A:  No, Thailand will maintain its longstanding policy of 
providing patent protection for 20 years, which is standard 
international practice.  There would likely be provisions in 
an FTA to extend the patent term of a new product to 
compensate for &unreasonable delays8 in patent and market 
approval, but it is anticipated that if adequate resources 
were allocated to the patent and market approval process in 
Thailand such delays would be unlikely. 
 
Q:  Will data exclusivity extend the patent term on drugs? 
 
A:  No.  Data exclusivity does not extend the patent term. 
Data exclusivity provides a period of protection for use of 
clinical data submitted to obtain market approval and is 
completely separate from the patent.  A generic manufacturer 
would not be prevented from producing a generic copy of a 
drug whose patent term had expired. 
 
Q:  Will data exclusivity prevent cheaper generic drugs from 
coming to market more quickly? 
 
A:  During the period of data exclusivity, a generic 
manufacturer would have to submit its own safety and efficacy 
data for its drug and not be able to rely on the data of the 
original drug submitted for market approval without the 
consent of the original manufacturer. However, the data 
exclusivity period begins after market approval and runs 
concurrent with the patent.  Since patent terms are 
substantially greater than the data exclusivity period, for 
the vast majority of drugs currently on the market the data 
exclusivity period would not have continued beyond the patent 
period.  Exceptions have been rare. 
 
However, when a drug is not patented, data exclusivity can 
provide a certain protection for a new drug for a period of 
time.  Under the FTA, a generic firm would maintain the right 
to introduce a generic copy using the generic firm,s own 
clinical test data.  However, the costs of developing safety 
and efficacy data for a generic firm are typically 
prohibitively high, and most firms would likely wait until 
the end of the data exclusivity period before introducing a 
generic copy. 
 
Q:  How will AIDS patients afford new, more expensive second- 
and third-generation HIV/AIDS drugs if these FTA provisions 
are in place? 
 
A:  The challenge of finding the resources to develop 
tomorrow,s HIV/AIDS medicines, as current treatments 
inevitably lose their effectiveness, is faced by the entire 
world community, including Thailand.  That challenge will 
remain with or without an FTA.  If history is a guide, these 
medicines will be developed primarily with the resources of 
the world,s innovative medicines companies.  These 
innovative medicines will be subject to the standard 
international patent regime.   FTA provisions are not likely 
to add any further protection to these drugs.  Here in 
Thailand, the government has long recognized the importance 
of antiretrovirals and has purposely avoided causing any 
&unreasonable delays8 which might result in a patent term 
extension.  There is every reason to believe that the Thai 
Government will continue that policy.  If a new 
antiretroviral medicine is patented and brought to market 
quickly, it would be highly unlikely that data exclusivity 
would have any impact on a generic manufacturer,s ability to 
bring that drug to market after the expiration of the patent. 
 
Q:  Would an FTA prohibit Thailand from manufacturing 
essential drugs under a compulsory license? 
 
A:  No.  U.S. law specifically requires that our FTAs respect 
the 2001 Doha Declaration on the TRIPS Agreement and Public 
Health, which affirmed that intellectual property rules 
should not prevent WTO members from taking appropriate 
measures to protect public health.  Thailand would still be 
able to produce patented essential drugs with or without the 
consent of the patent owner in cases of public health 
emergency and other specific instances. 
 
Q:  A compulsory license would set aside a patent, but not 
necessarily allow access to data to obtain market approval 
for a drug.  Wouldn,t an FTA,s data exclusivity provisions 
prevent Thailand from issuing a compulsory license? 
 
A:  No.  Both the U.S. and Thailand recognize the importance 
of protecting public health.  If circumstances ever arose in 
which a drug were produced under a compulsory license and it 
were necessary to approve that drug to protect public health, 
the data protection provisions in an FTA would not stand in 
the way. 
 
End Document 
 
BOYCE