VZCZCXRO0730
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #7133/01 3322348
ZNR UUUUU ZZH
R 282348Z NOV 06
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 3187
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHNE/AMEMBASSY NEW DELHI 4225
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHPH/CDC ATLANTA GA
RUEAUSA/USDOHHS WASHDC

UNCLAS SECTION 01 OF 02 BANGKOK 007133 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE PASS USTR FOR B. WEISEL, S. MCCOY 
STATE PASS USPTO FOR K. HAUDA, K. FERRITER, P. SALMON 
HHS/OHGA FOR AMAR BHAT, ERIKA ELVANDER 
USDOC FOR JKELLY 
 
E.O. 12958:N/A 
TAGS: ECON ETRD KIPR TH
 
SUBJECT:  THAILAND PREPARING COMPULSORY LICENSE FOR HIV/AIDS DRUG 
 
 
(U) This document is sensitive but unclassified, please protect 
accordingly. 
 
¶1. (U) This is an action request, see paragraph 9. 
 
¶2. (SBU) Contacts at the Thai Department of Intellectual Property 
(DIP) told Embassy that the Ministry of Public Health (MoPH) may 
announce on December 1 that they plan to pursue a compulsory license 
for efavirenz, an antiretroviral used to treat HIV-positive 
patients.  The announcement would be timed to coincide with World 
AIDS Day on Friday. 
 
¶3. (SBU) Merck & Co., a U.S.-based pharmaceutical manufacturer, 
holds the patent for efavirenz in Thailand and distributes it 
locally under the trade name Stocrin.  Efavirenz is a first-line 
AIDS drug, used primarily for the five or ten percent of patients 
who have had an adverse reaction to other first-line combinations. 
Thailand widely uses a domestically produced generic antiretroviral 
known as GPO-vir to treat its large HIV-positive population; 
substituting efavirenz greatly increases the cost per patient. 
Merck estimates purchases of efavirenz account for approximately 25 
percent of expenditures on all antiretrovirals in Thailand. 
 
¶4. (SBU) Article 51 of the Thai Patent Act spells out procedures for 
a compulsory license.  The Act allows for an RTG ministry or 
department to "exploit any invention under any patent" for a variety 
of reasons, including "for the sake of other public interest", the 
justification the RTG will most likely use.  Merck's local legal 
counsel believes that the MoPH must apply to the DIP to issue the 
compulsory license and enter into royalty negotiations in advance of 
issuing the license.  The DIP, on the other hand, asserts that under 
Thai law, MoPH can publicly announce its plans to issue a compulsory 
license and negotiate the royalties afterwards.  Article 31 of the 
WTO TRIPS agreement would normally require MoPH to first request 
authorization from Merck to produce or import under "reasonable 
commercial terms", however, DIP says MoPH plans to skip that step 
using exceptions under Article 31(b) for "public non-commercial 
use".  The lead actor in importing generic product or ingredient 
would be the Government Pharmaceutical Organization, a 
revenue-earning state-owned enterprise whose activities may not 
qualify as public non-commercial use. 
 
Why this drug?  Why now? 
------------------------ 
 
¶5. (SBU) Merck's local representatives are perplexed why the MoPH 
has decided to break their patent on efavirenz.  As a middle-income 
country with a greater than one percent prevalence of HIV cases, 
Thailand qualifies for Merck's lowest price offered under its 
pricing policy.  Merck reports to us they sell the drug at a 
no-profit price to NGOs, approximately 1000 baht per month (USD 
27.50), less than half the price sold at in other middle income 
countries such as China and Brazil.  Merck also sells to the 
government for 1300 baht per month (USD 35.80), the higher price 
reflecting additional local costs imposed by the RTG. 
 
¶6. (SBU) It is unclear yet whether the MoPH would seek to import a 
generic version of the drug or produce it locally.  Merck believes 
an Indian generic firm may be able to supply efavirenz at a slightly 
lower cost, but believes the savings would be minimal and hardly 
worth the effort.  Contacts at the Government Pharmaceutical Office 
say they would need approximately a year to perform the necessary 
testing and receive approval to begin domestic production.  However, 
MoPH believes GPO could eventually produce a generic copy of 
efavirenz for 30 to 50 percent less cost than the original drug. 
 
¶7. (SBU) According to a MoPH source we believe credible, local 
public health NGOs instigated the proposal for the compulsory 
license and may be pushing the idea as much as a political test as 
for the possible cost savings to AIDS patients.  Although the MoPH's 
Department of Disease Control initially rejected the idea, the NGOs 
succeeded in submitting their proposal directly to the Minister. 
There still appears to be a lack of consensus within the MOPH on the 
wisdom of pursuing a compulsory license and it is not yet clear 
whether a final decision has been made to push ahead with the plan. 
DIP has expressed its own reservations and is sensitive to how a 
compulsory license could affect Thailand's image regarding 
intellectual property protection. 
 
¶8. (SBU) Embassy has been in contact with officials at Ministry of 
Commerce and Ministry of Foreign Affairs to ensure they are aware of 
 
BANGKOK 00007133  002 OF 002 
 
 
MoPH activities and the full implications of any actions they may 
take.  We understand an MoPH meeting will take place November 29 to 
discuss the issue further. 
 
¶9. (SBU) Embassy requests Washington agency guidance on how to 
proceed and what message we should communicate to the RTG on this 
matter.  We note that during FTA negotiations with Thailand the 
issue of pharmaceutical patents was highly controversial and 
engendered large protests.  Thailand is rightly proud of its efforts 
to slow the spread of AIDS and the Thai public looked dimly on the 
FTA's possible effects on access to antiretrovirals.  AIDS 
organizations and public health activists hold widespread sympathy 
in and out of the government and we suspect a compulsory license 
would meet with public approval.  A compulsory license case would be 
watched closely both in Thailand and globally to gauge USG reaction 
and commitment to the public health provisions in the WTO.  We are 
under no illusion that any USG action to prevent a compulsory 
license could be kept out of the public eye. 
ARVIZU