VZCZCXRO4563
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #1269/01 0632345
ZNR UUUUU ZZH
R 042345Z MAR 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 5236
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGV/USMISSION GENEVA 1786
RUCPDOC/USDOC WASHINGTON DC
RUEAHLC/HQS DHS WASHDC

UNCLAS SECTION 01 OF 02 BANGKOK 001269 
 
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:  RTG DEFENDS COMPULSORY LICENSES, INDUSTRY CONSIDERS 
OPTIONS 
 
¶1.  (U) Summary:  The RTG issued a white paper defending its use of 
compulsory licenses and stated that it will continue their use. 
Industry attempted to open a dialogue with the Ministry of Public 
Health to head off future actions, but met antagonism by health 
officials who hold the industry in low regard.  Officials were 
interested in little that industry could offer other than lower 
prices for their products.  Companies affected by the compulsory 
licenses are still considering what legal options are available to 
challenge their issuance, but have otherwise hit a dead end on how 
else to proceed.  Public health officials have lost none of their 
fervor for compulsory licenses, but it is unclear they will be able 
to push future licenses through the cabinet.  End Summary. 
 
¶2.  (U) On February 16, the RTG Ministry of Public Health (MoPH) 
released an 80-page white paper explaining their decision to issue 
compulsory licenses to override patents on three pharmaceutical 
products in Thailand.  The paper justified the actions on the RTG's 
limited health budget and the need to ensure access for Thai 
patients to all drugs on the country's National List of Essential 
Medicines (NLEM).  The paper states that compulsory licenses will 
continue and sets out three criteria for choosing medicines:  1) 
drugs must be on the NLEM; 2) must be necessary for solving a health 
problem in the country; and 3) have a very high price (undefined). 
The government will pay royalties of .5 or two percent of sales for 
drugs of high and low volume, respectively. 
 
¶3.  (U) A MoPH report to the Prime Minister identified ten other 
drugs that the Ministry has considered for future CLs, including two 
antibiotics and eight drugs to treat heart disease and cancer.  Some 
press reports mentioned consideration of Bristol-Myers Squibb's 
antiretroviral atazanavir as well, though the drug is not listed on 
the NLEM and would presumably therefore not be eligible.  The report 
gave no timeline for any future CLs and it is not clear how 
thoroughly the Ministry reviewed the list of potential CLs.  Several 
of the drugs listed have expired patents, and at least one was never 
patented in Thailand. 
 
¶4.  (U) The local pharmaceutical association, Prema, met with MoPH 
Minister Mongkol Na Songkhla on February 19 and presented a proposal 
for a joint committee between Prema and MoPH that they dubbed the 
Thailand Health Access Initiative (THAI) Consultative Forum.  For 
anti-trust reasons the committee would not discuss pricing, but 
could discuss technology transfer issues and philanthropic 
activities to work on neglected diseases, donate medicines and 
improve delivery to difficult to reach areas of Thailand.  Prema 
said the revocation of CLs would not be a condition for 
establishment of the committee, but would be an item for 
consideration. 
 
¶5.  (U) MoPH roundly rejected the idea and participants in the 
meeting said they were shocked by how vehemently the Minister 
reacted.  MoPH officials present blasted the proposal as little more 
than a delaying tactic and insisted the only proposal they would 
accept from industry would be a list of which drugs they would 
reduce the price and by how much.  Dr. Mongkol roundly criticized 
the industry as a whole.  The Minister was reportedly an 
enthusiastic reader of a recent anti-pharma book, "The Truth about 
the Drug Companies", and frequently cites arguments from the book to 
justify the CLs.  In a press interview, Dr. Mongkol conceded that 
last year's coup gave him the chance to act, and that a "true 
politician" would not have pursued his CL policy, fearing the 
consequences.  Mongkol continued, "I am not a politician, and I have 
nothing to lose." 
 
RTG walling itself off 
---------------------- 
 
¶6.  (U) The Ministry of Commerce rebuffed an Embassy request for 
Ambassador Boyce to meet with Minister Krirk-krai to deliver a 
letter from Commerce Secretary Gutierrez regarding CLs.  In the end, 
Econ Counselor and Commercial Counselor met with Deputy DG Srivicha 
Rackchamroon, who politely agreed that economic times were in fact 
difficult, but had little else to say. 
 
¶7.  (SBU) EU representatives are requesting Brussels' approval for a 
demarche on the CL issue.  Proposed points express the EU's surprise 
that CLs were extended to products beyond those used for epidemics 
and seeks clarification on Thai policy, including the types of 
medicines/diseases that would be covered by CLs, the duration of the 
use of CLs and the circumstances which justified their use.  The 
points also express concerns over the lack of consultation with 
industry.  Unfortunately, MOPH informed the EU that Dr. Mongkol 
 
BANGKOK 00001269  002 OF 002 
 
 
would be busy for the entire month of March; the Ministry of 
Commerce has yet to respond to their appointment request either. 
For their part, the Swiss Embassy has taken no action and has no 
plans to do so, citing an absence of complaints from Swiss 
pharmaceutical companies. 
 
¶8.  (U) Industry was briefly buoyed by reports that WHO Director 
Margaret Chan had criticized Thailand's CL policy, telling the press 
after a meeting with Dr. Mongkol that there had to be a right 
balance for compulsory licensing.  However, only days later Chan 
wrote Mongkol that the WHO supported the use of TRIPS flexibilities, 
and clarified that her statements should not be taken as a criticism 
of the RTG's decision, though she believed industry was still part 
of the solution to high health costs. 
 
Companies mull their legal options 
---------------------------------- 
 
¶9.  (SBU) Merck & Co., whose antiretroviral efavirenz was hit by a 
CL last November, filed an appeal with the Department of 
Intellectual Property on February 12, challenging the RTG decision. 
The press has reported that the appeal was rejected, but Merck has 
yet to receive an official response.  Although still considering 
themselves in talks with the RTG, they are not hopeful for a 
negotiated resolution.  Merck says they delivered their final offer 
to MoPH on February 6, offering a price still above that of the 
comparable generic.  They have received no formal response.  MoPH's 
white paper revealed that generic efavirenz has been certified and 
registered with the Thai FDA and the first order has already entered 
the country, though Merck says they have not seen generic product 
enter distribution channels.  The Government Pharmaceutical 
Organization (GPO) recently contacted Merck regarding payment of 
royalties for the purchases. 
 
¶10.  (SBU) Abbott Labs, target of a January CL /n their 
antiretroviral Kaletra, has yet to make a final decision on whether 
to take legal action.  In contrast to Merck, Abbott has yet to 
proffer a reduction in price to head off the CL and has not actively 
pursued negotiations.  Abbott's lawyers are prepared to file a 
series of appeals with the Ministry of Public Health's Department of 
Disease Control, the actual isster of the CL on Kaletra.  If the 
appeals are unsuccessful, Abbott could then bring a case to the 
Intellectual Property court to determine the CL's legality. 
 
¶11.  (SBU) Paris-based Sanofi-Aventis, maker of the anti-clotting 
agent Plavix and another target of a CL, has also declined to 
negotiate and has not offered a reduction in price.  Sanofi has yet 
to take legal measures but consider all options to be open at this 
time. 
 
Purging GPO 
----------- 
 
¶12.  (U) On February 28, the RTG cabinet dismissed GPO Managing 
Director Mongkol Jivasantikarn, in part because of an apparent lack 
of enthusiasm for GPO's role in issuing CLs and producing generic 
versions.  Press reports cited a personal row with GPO board 
chairman Vichai Chokewiwat, a vocal booster of CLs within the RTG. 
Vichai declined to disclose the reasons for Mongkol's dismissal, 
noting only that the decision had been approved by GPO's directors. 
Industry reps say that MOPH officials considered the GPO Director to 
be a holdover from the previous administration and had been seeking 
a reason to oust him. 
 
¶13.  (U) Comment:  Industry has thus far been unable to coordinate a 
common approach to the RTG's CL policy and actions have been 
haphazard.  Efforts by individual companies to negotiate or 
challenge the CLs have not produced results, and the tentative 
attempts to approach the RTG as an industry have met with outright 
hostility.  MoPH officials have lost none of their ardor for CLs, 
but it is unclear whether the rest of the RTG has the stomach for 
yet more controversial economic decisions.  Top RTG officials have 
mentioned that any future CL decision be considered first by the 
cabinet, and approval is not assured.  After a long series of 
economic missteps and the recent high-profile resignation of Deputy 
PM Pridiyathorn, cabinet officials may be more interested in keeping 
controversy to a minimum.  End Comment.