Thailand's New Drug War

Thailand's ruling junta has earned a reputation for ineptitude since it seized power in September. But the generals are now winning points worldwide for an attack on pharmaceutical giants like Merck, Sanofi-Aventis and Bristol-Myers Squibb. By invoking vague World Trade Organization rules that allow governments to void drug patents during public- health emergencies, Bangkok has since November approved generic production of two popular anti-AIDS drugs and one blood thinner, slashing their cost to patients by up to 90 percent. Bangkok is now urging companies to begin discounting other drugs; Health Minister Mongkol Na Songkhla warned last month that "if negotiations fail, we are ready to act."

Experts have likened the WTO drug rules to nuclear weapons—deterrents best never used. Since the rules came into effect in 2001, drug companies have largely avoided becoming targets by slashing prices or extending royalty-free licenses to poor nations. Thailand is among the first middle-income countries to actually suspend a foreign drug patent under the WTO rules. With a per capita income of $2,750 a year, Thailand represents a class of nations that could put a huge dent in drug-company profits if they follow suit.

Humanitarian groups like Oxfam and Doctors Without Borders argue that overpriced meds can cripple public-health budgets in emerging nations like Thailand as well as in poorer places, and have encouraged other governments to follow Bangkok's lead. But Western governments are alarmed. U.S. trade representatives have urged Thailand to reconsider its decision; Abbott Laboratories of Chicago announced it would no longer market new drugs in Thailand after the junta issued a generic license for one of its AIDS drugs. Anti-AIDS activists called the pullout "immoral," but advocates of free trade see Thailand's move as a big threat. "This is a massive political movement against intellectual property," says Philip Stevens, director of the health program at the International Policy Network, a London-based think tank. "It's not specific to Thailand, and it seeks to make medicine into public, not private, goods."

Yet the Thai generals did not act without prompting. In a 2006 study, the World Bank predicted that despite a model AIDS-prevention program, Thailand would see a surge in costs as the virus grows resistant to older antiretroviral drugs. New, patented drugs would drive up the yearly cost per patient from $481 to more than $6,700 because they're not available in generic form. The World Bank said Bangkok should consider compulsory licensing for key new AIDS treatments, but warned of the likely "political" trouble to come.

Thailand took up the challenge, but in ways that opened the door to counterattack. The nationalistic generals put generic production into the hands of a state-owned manufacturer with a track record of producing substandard copies that speed up resistance in AIDS patients. And they began pushing to make generics not only for AIDS drugs, but also for cancer and heart medications and antibiotics. A top health official suggested recently that patents on some 15 percent of rights-protected drugs now sold in Thailand could be eventually suspended. "Their aim is to make Thailand a regional manufacturing hub [for generics]," says Ste-vens. "There's a lot of industrial policy and self-interest here."

There's also a knock-on effect: the Philippines, another middle-income Asian nation, is considering bills that "if passed, will mean that we can manufacture life-saving drugs in response to HIV/AIDS and potential pandemics," says Secretary of Health Francisco Duque. Other countries such as Brazil and Bolivia have expressed public support for Thailand's actions or are believed to be contemplating similar moves. "We have to find the right balance for compulsory licensing," warned newly elected World Health Organization director-general Margaret Chan during a visit to Thailand in February, adding: "We can't be naive about this. There is no perfect solution."

A showdown is approaching. "It's messy," says Paul Cawthorne, country director for Doctors Without Borders in Thailand. "And that is exactly the reason why we need some organization [to oversee the provision of affordable medicines worldwide], and I think it should be the WHO." Which is precisely what the drug companies and their supporters fear most: a system regulated by bureaucrats, not markets, in which poor and not-so-poor alike contribute little to the huge cost of R&D for drugs to contain the planet's killer diseases.