FROM THE ECONOMIST INTELLIGENCE UNIT
Thailand is contemplating joining the Trans-Pacific Partnership. Could the US-led trade pact affect Thailand's attitude to patent protection?
For the past few months, Thailand has been considering three major trade pacts: the Trans-Pacific Partnership (TPP); an EU free trade agreement; and a comprehensive Thailand-India free trade agreement. Many businesses and policy-makers in Thailand see these trade deals as a way of rebooting global demand, yet there are several issues standing in the way. One is Thailand's attitude to intellectual property rights (IPR) in the pharma industry, which the US in particular is keen to change.
The US Trade Representative feels that Thailand's IPR regulations continue to fall short of those outlined in the World Trade Organisation’s (WTO) TRIPS agreement, which is why it kept the country on its Priority Watch List in 2012. The US government does acknowledge that Thailand has made progress. It also recognises that the Thai government has to balance patent rights against the country's significant public health challenges. Nevertheless, this will be a delicate subject if Thailand does join talks over the TPP, which would see the current trade pact between Brunei, Chile, Singapore and New Zealand extended to up to eight other countries*.
Indeed, when US President Barack Obama visited Thailand shortly after his reelection in November 2012, his arrival sparked protests from public interest groups such as the Thai Civic Network and FTA Watch before the President’s plane had even touched down at Don Maung Airport. They argue that joining the TPP could force Thailand to extend its intellectual property rules beyond the requirements of the TRIPS agreement, affecting access to affordable medicines.
The issues were first raised during previous trade negotiations with the US, when leaked reports suggested that the Americans were pushing for several measures to increase patent protection. To the delight of protestors, those talks were scuppered by the military coup of 2006. This time round, the negotiations are again being held behind closed doors, but according to humanitarian health organisation Medecins Sans Frontieres (MSF) leaked information suggests that the US is fielding similar proposals to last time.
One possible proposal concerns the introduction of second-use patents, which would broaden the scope of patentability. That, says MSF, would restrict the government's ability to determine what sort of innovation deserve a patent. MSF says the US has also requested that TPP members permit ever-greening. That would allow companies to patent a new form, use, or method of using an existing medicinal product, regardless of whether they are truly innovative or improve efficacy or safety.
The US has also asked for restrictions on pre-grant patent oppositions, claims MSF. This is the right, under the TRIPS agreement, for governments, generic manufacturers or patient groups to challenge a patent before it is granted. A proposal supporting patent extensions, meanwhile, would allow patent holders an opportunity to extend market exclusivity beyond the 20-year period provided for under TRIPS, as compensation for administrative delays in regulatory processes.
MSF says the US has also repeated its proposals that Thailand should expand its data exclusivity laws, to allow patent-holders to withhold information on their drugs from potential generic rivals for a certain time period (possibly up to five years). This is the issue that prompted the most vociferous criticiam from MSF and other charities such as Oxfam when it was raised during previous trade talks. They argue that by delaying the entry of generic competitors, or forcing them to duplicate clinical trials, these measures can pump up drug prices beyond the reach of many patients.
The leaked documents, says MSF, do not specifically mention compulsory licences, but this is an issue over which Thailand and the US have already clashed. Thailand has been using compulsory licences since November 2006, when the health ministry gave the go-head for generic copies of Merck & Co’s anti-retroviral HIV/AIDS drug Sustiva (efavirenz). But the issue has become more pressing for Western drugmakers in Asia since India and China began to push for greater use of these licences during 2012.
The MSF is not the only pressure group concerned by the TPP talks. In November, a group of 14 civil society groups that included the Thai Civic Network and FTA Watch in November wrote an open letter to Prime Minister Shinawarta warning that tightening intellectual property regulation would put equal access to medicines and the national health care system under threat. As well as highlighting the MSF issues, they also claim that the US is asking for patents over surgical practices and diagnostics, as well as concession over drug pricing. That could push up costs sharply for Thailand's Universal Health Care Scheme, they argue.
The case for talks
All these protests appear to have had an effect. In the week before President Obama’s arrival, Thailand had been widely expected to join the negotiations for the TPP. But since then, government officials, including Prime Minister Yingluck Shinawatra, have failed to make any commitment. At the same time, trade negotiations with India now appear to have been delayed, to the end of this year at least.
Nevertheless, the TPP idea is certainly not off the table. Some industry bodies are pushing for trade deals to improve Thailand’s access to important markets such as Mexico and Canada as well as the US. Many in the pharma industry feel that weak intellectual property laws have been hindering domestic and foreign investment into production, as well as research and development. Though a number of foreign pharma companies are already present in the market, notably Pfizer, Sanofi and GlaxoSmithKline, their operations have remained small.
To help boost the sector, Thailand is already drafting amendments to its patent laws that would ease applications, and bring the system for compulsory licensing into line with the WTO TRIPS agreement. There is also a push for greater competition, with the Thai Pharmaceutical Manufacturers' Association, an association of around 80 private drug producers, arguing that the government should strip the Government Pharmaceutical Organisation of its near-monopoly on the provision of drugs to public hospitals. TPMA argues this would help to bring drug prices down from their current high levels.
The debate will undoubtedly rage on. Healthcare remains a top policy priority for the Thai government—and for voters—following the introduction of universal healthcare in 2001. As a result, any TPP negotiations will prove hard to steer. The government will need to satisfy demands for tightened pharmaceutical patent laws while simultaneously being seen to defend its citizens rights to access essential medicines at a price its public health insurance schemes can afford.
Yet the US is also likely to come under pressure from international humanitarian organisations, as well as other TPP candidate countries, to ease its demands. In late 2012, seven US-based advocacy groups wrote an open letter to the US President asking him to ‘drop any demands that Thailand or other countries facing major public health crises change their intellectual property rules at the cost of the health of their people’. Even if Thailand does join the talks, therefore, both sides will face some difficult negotiations.
* US, Australia, Peru, Vietnam, Malaysia, Mexico and Canada, and possibly Thailand.