Abbott Laboratories threatens Thai treatment access
Recent attempts by Thailand to make urgently needed HIV/AIDS drugs affordable are being challenged by the pharmaceutical industry. One drugs company, Abbott Laboratories, has announced that it will not sell any new medicines in Thailand - threatening the right of countries to put public health before corporate profits.
Campaigners demand access to generics at the 2004 International AIDS Conference in Thailand
Reducing the cost of drugs in Thailand
There are 500,000 people living with HIV or AIDS in Thailand.
Thailand has been committed to providing universal access to HIV/AIDS treatment since 2003.
Thailand currently spends $7 billion on healthcare and this is projected to rise by 10% annually.
Recent evaluations by the World Bank and the World Health Organisation provide evidence that brand-name drugs are too expensive for Thailand, and that costs are likely to rise dramatically. Drug costs are rising as patients become resistant to older formulations and need to switch to new patented drugs. If just one quarter of Thai patients needed newer patented drugs, this would absorb three quarters of the entire treatment budget by 2020. The WHO and the World Bank have both recommended that compulsory licensing be used in Thailand.
Thailand’s production of generic versions of anti-retrovirals (ARVs) has dramatically reduced the cost of drugs, enabling the government to move closer to providing treatment for all those in need.
Before generic production, the cost of standard HIV/AIDS treatment in Thailand was over 33,330 baht per patient per month (US $924), and only 3,000 people were getting treatment. In 2002, Thailand launched a generic version of HIV/AIDS triple therapy, resulting in an 18-fold drop in the cost of treatment. Thanks to this, over 85,000 people with HIV/AIDS are today receiving treatment.” Medicins Sans Frontiers (MSF)
Abbott’s standard price for Kaletra in middle income countries such as Thailand is $2,200 per patient per year - far more than most people can afford, and far more than the standard 3-in-1 first-line treatments available in developing countries for $140/year. Global sales of Kaletra in 2006 were $1.1 billion.
The Thai government estimates that a generic version of Kaletra will bring prices down to 20% of its current price, enabling them to “save an additional 8,000 lives”. Even more lives could be saved if the move encourages further generic competition and economies of scale.
In November 2006 Thailand issued a compulsory license for Efavirenz, a first line drug with fewer side effects than many other first line drugs. MSF reports that before this the drug could only be issued for those suffering the most serious side effects. In January 2007, 66,000 bottles were imported from a generic manufacturer, allowing Thailand to treat an extra 20,000 patients at the same cost as before.
The compulsory licence issued for Kaletra could save Thailand $24 million a year.
Update
On 10 April Abbott offered to drop the price of Kaletra in Thailand by 40%, bringing it down to approximately $1,200 dollars per patient per year. Abbott also announced it would drop the price of Kaletra by more than half in 40 low and middle-income countries, bringing it down to $1000 per patient per year.
While price reductions are a move in the right direction, Abbott is still punishing patients in Thailand by refusing to register any new drugs there. Abbott wishes to make an example of Thailand, by punishing it for issuing compulsory licensing, despite the fact that Thailand’s use of compulsory licensing is legal, and follows the advice of the World Bank and the World Health Organisation.
The Thai government is still considering the offer. Abbott’s offer in Thailand may match the price of producing a generic version in the short term. However, if further generic competition is encouraged and there are greater economies of scale, the cost of a generic version could drop significantly.
Thailand’s move to reduce prices
Thailand has been leading the fight against the HIV/AIDS epidemic in Asia, but high drug prices have been a major obstacle to them providing treatment for all those in need. Recently, Thailand attempted to take measures to lower the price of urgently needed drugs. It is now faced with attacks from pharmaceutical companies for excercising its right to protect public health.
The Thai government has issued compulsory licences for three medicines, including the AIDS drugs efavirenz and Kaletra, so as to make treatment affordable, and to ensure more reliable drug supplies. This will allow them to import or produce generic versions of the drugs without relying on the companies holding the patent, and will bring prices down significantly.
Abbott’s response
In a shocking move, Abbott Laboratories, manufacturer of the key AIDS drug Kaletra, have announced they will withdraw registration of all new drugs in Thailand and will not sell any new medicines in the country, unless Thailand reverses its decision.
This is a blatant attempt to bully Thailand, and to scare off other developing countries that may try to use compulsory licensing procedures.
Abbott’s attempt to protect the high price of Kaletra, will come at the expense of Thai patients. It won’t just be Abbott’s versions of the drugs that will be unavailable. Without registration its also much harder for Thailand to produce or import generic equivalents, as evidence about the safety and effectiveness of the formulation may not be available to the regulatory agencies.
Abbott’s move effectively denies treatment to millions of people. It will immediately affect seven drugs, including the new ‘heat-stable’ version of Kaletra, which is recommended by the World Health Organisation for use in resource poor settings. Unlike the older formulation it does not require refrigeration and would therfore be much better for Thailand’s warm climate. Dr. David Wilson of Medicins Sans Frontieres Thailand, said:
Our patients in Thailand, who still use the old version of the medicine, have been waiting for this new version for a very long time. The drug was registered in the US in October 2005, but still cannot be used in Thailand and many other countries where it is desperately needed. Refusing to sell the drug here is a major betrayal to patients.”
Abbott’s false claims
Abbott falsely claims that Thailand has “chosen to break patents on numerous products, ignoring the patent system”. And Abbott has influential allies. The U.S. Secretary of Commerce, Carlos M. Gutierrez, told pharmaceutical companies at a recent awards dinner that the Thai government has “recently made unilateral decisions to break patents, disregard innovation and pre-empt the type of transparent negotiation that has worked in many other developing countries.”
Thailand’s move is legal and important
Thailand’s move is part of their commitment to provide universal access to HIV/AIDS treatment, and is perfectly legal under Thai law and World Trade Organisation (WTO) rules. The WTO’s TRIPS agreements permits the issue of compulsory licenses under a number of circumstances — cases of national emergencies, extreme urgency and for public non-commercial use. Countries themselves determine the grounds on which a license is issued. Even the US government, a stalwart defender of big Pharma’s interests, has said “we have not suggested that Thailand has failed to comply with particular national or international rules”.
Compulsory licensing is frequently used in developed countries. The US has made extensive use of compulsory licencing, ranging from licences for bird flu vaccines to software, automobile and television technology.
Thailand has set strict limits on the types of drugs and circumstances in which it will issue a compulsory licence. Kaletra is a life-saving AIDS drug, and the licence will provide for poor patients within the public health system — those who could not afford to buy Abbott’s version. Abbott’s existing market — those who can afford Abbott’s high mark-up — is not affected. Hardly the “assault on the international patent system” that one Abbott spokesperson referred to.
Abbott will still receive royalties when the drugs are produced under a compulsory license.
Both the Director General of the World Health Organisation, Margaret Chan, and Peter Piot, Director of UNAIDS, have written to Thailand in support of their use of compulsory licensing. Margaret Chan said:
WHO unequivocally supports the use by developing countries of the flexibilities within the TRIPS agreement that ensure access to affordable, high quality drugs. This includes the use of compulsory licensing, as described in paragraph 6 of the Doha Declaration of the TRIPS Agreement and Public Health. The decision whether to issue a compulsory license for a pharmaceutical product is a national one. There is no requirement for countries to negotiate with patent holders before issuing a compulsory licence.”
Thailand has provided evidence of repeated efforts to negotiate price reductions with drug companies, but to no avail. In any case prior negotiation is not necessary under WTO rules for the issue of a licence for public non-commercial use. Prior negotiation is often used as a delaying tactic by pharmaceutical companies. Brazil engaged in protracted negotiations with Abbott, but was unable to secure significant price reductions until it announced its intention to issue a compulsory license.
Compulsory licensing is a vital tool in stimulating the effective competitive market that is needed to bring rising drug prices down and meet and sustain the promise of universal access to treatment. By further expanding the market for generic products Thailand’s move will help bring prices down everywhere.
The impact of Abbott’s unethical behaviour will be felt far beyond Thailand
Abbott’s statements are grossly misleading. Abbott’s actions are much worse — they threaten the right to health of millions of people and undermine the international commitment to make AIDS treatment available to all who need it.
The impact of this behaviour will be felt far beyond Thailand. If Thailand, a middle-income country, struggles to assert its rights to use the TRIPS flexibilities, then low income countries, who face even greater barriers, will be discouraged from even attempting to use the same processes. While much of the political pressure intended to discourage countries from using their rights under the TRIPS agreement is exerted behind closed doors, this very public bullying from Abbott must not go unmet.
What we are asking for:
Abbott must stop blocking access to medicines in Thailand and elsewhere.
The UK government (together with other EU and G8 governments) must voice their support for Thailand’s use of the TRIPS flexibilities as a measure to lower drug prices in order to provide essential medicines.
It must also ask Abbott to stop its life-threatening behaviour in Thailand.
“Coming back to the question of Thailand…” - Campaigners question Hilary Benn
P.A.Knox
Secretary of State for International Development, Hilary Benn, promised campaigners that he would raise the issue at the G8 Development Ministers meeting earlier this week, but he has yet to issue a statement on Thailand and Abbott.
Campaigning pressure clearly had some effect: the Chair’s summary of the Development Ministers’ meeting included this text:
“G8 Development Ministers reaffirm their commitment to come as close as possible to universal access to HIV/AIDS prevention, treatment and care by 2010. However the price of some drugs remains prohibitive for many countries, and more needs to be done to help lower their cost including the use of TRIPS flexibilities to the fullest extent.”
Hilary Benn also referred to the Thai case in the press conference after the meeting. However, the UK still refuses to comment specifically on Thailand’s use of TRIPS flexibilitiies - which is an important omission.
While the UK has recently reiterated its general support for developing countries’ use of TRIPS flexibilities this is of little worth if it is not backed up by specific support when countries do use the flexibilities.
Further information
Kaletra is the commercial name for Abbott’s old version of lopinavir/ritonavir. The new heat stable version is sold as Aluvia.
Thailand has produced a report on its decision to issue compulsory licenses, “Facts and evidences on the 10 burning issues related to the government use of patents on three patented essential drugs in Thailand”, which includes the background to the decision, information on its legality, other instances of compulsory licensing, and correspondence supporting the decision.
Abbott’s Greed - An activist website dedicated to the actions of Abbott Laboratories.
MSF´s statement on the case
Blogs from the Consumer Project for Technology
News briefings from the Kaiser Network