PhRMA Special 301 submission on Thailand

The following discusses the 2009 PhRMA submission for the USTR Special 301 list on Thailand. Thailand is one of three Asian countries (China, Philippines and Thailand) that were singled out by PhRMA for the harshest treatment. The submission on Thailand covers several topics, including these:

Compulsory Licenses: PhRMA, of course, does not like Thailand using compulsory licenses. PhRMA, a trade association, is demanding to be consulted before individual compulsory licenses are issue. PhRMA objects to compulsory licenses being issue as “cost cutting” measures.

Patent Linkage: PhRMA wants Thailand to implement the problematic and increasingly discredited TRIPS plus system of linkage between patent status and drug registration.

Data Exclusivity: PhRMA wants Thailand to implement the TRIPS plus measure of requiring permission to rely upon publicly known scientific evidence that drugs are safe or effective. This would require generic firms to replicate costly and time consuming clinical trials, and to violate the ethical protections against repeating experiments on human subjects that are part of the Declaration of Helsinki on the Ethical Principles for Medical Research Involving Human Subjects.

Patent Delays: PhRMA wants speeder patent approvals, and are demanding that Thailand join the WIPO Patent Cooperation Treaty (PCT), to make it easier and faster to file patents in Thailand.

Government Procurement: This section includes an attack on the Thai Government Pharmaceutical Organization (GPO).

Safety Monitoring Program (SMP): PhRMA objects to the Thai program of monitoring the safety of new chemical entities, before widespread use is promoted.

New Draft Drugs Bill: PhRMA objects to a proposed bill to limit drug registration that involves “improper or unworthy price structure.”

Product Liability Act: PhRMA wants its drugs except from product liability, when they are approved by the Thai FDA for use.

Excerpts from the PhRMA submission follow:



PhRMA and its member companies operating in Thailand are very concerned that Thailand has made no progress in addressing PhRMA’s concerns over the past year, and fear that the Government is backsliding in its protection of intellectual property rights. Despite previous assurances by the Thai Government that a constructive healthcare dialogue between PhRMA’s member companies and Thailand Government officials would be convened, numerous good faith attempts by member companies to start this process have been rebuffed. Specifically, PhRMA’s member companies continue to have major concerns related to counterfeit medicines, patent linkage, data exclusivity, patent delays, government procurement, and safety monitoring period requirements.

For these reasons, PhRMA requests that Thailand be designated a Priority Foreign Country for the 2009 Special 301 Report and that the U.S. Government continue to seek assurances that the problems described herein are quickly and effectively resolved.

Intellectual Property Protection

Compulsory Licenses
As noted in our 2008 Special 301 submission, in no instance has Thailand cited a national emergency or a situation of extreme urgency as its justification for issuing compulsory licenses. In addition, the Thai Government’s actions ascribed to “public non-commercial use” remain poorly defined.

PhRMA member companies regarded Thailand as an emerging leader in innovation and a developing center of excellence in life sciences in the region. Opportunities existed to work with Thailand’s medical scientists, healthcare professionals, and science and health policy experts to foster an environment that would support development of a vibrant life sciences sector in Thailand. The deterioration of intellectual property rights has undermined these opportunities.

Thailand’s use of compulsory licenses raises concerns within the broader Thailand business community. As noted during a meeting between U.S. business leaders and the Prime Minister during the APEC Summit in September 2007, and subsequently at a US-ASEAN Business Council discussion in New York City, PhRMA member companies believe that the Government’s policies have resulted in a very unpredictable business environment for investors and have created a situation that may ultimately work to disadvantage Thai citizens.

In November 2008, Thailand’s press widely reported on the Ministry of Public Health’s intention to issue additional compulsory licenses. At no point in this process has Thailand consulted with PhRMA, PReMA or individual member companies that might be affected by these actions. Also, statements made by the Minister of Public Health in recent weeks and reported by the press indicate that the Government has pursued a compulsory licensing policy primarily as a cost-cutting measure and not as a response to national emergencies.

PhRMA urges the new Government to adopt holistic healthcare reforms that address issues related to overall healthcare expenditure, government distribution of medical care and pharmaceuticals, taxes and tariffs on medicines, public hospital management and expenses, private contributions for healthcare products and services, and patient education and knowledge on disease and preventive care. PhRMA member companies would welcome the opportunity to engage in a constructive public-private dialogue that includes all stakeholders to discuss sustainable ways in which broader access to innovative medicines could be achieved and how to develop a quality healthcare system in Thailand.

Pharmaceutical Counterfeiters

The growth in availability of counterfeit medicines has become a serious problem in Thailand. Counterfeit pharmaceuticals are readily available in most drug stores and pharmacies. Counterfeit medicines pose a major health risk to patients in Thailand and across the world.

The resources currently allocated by the Thai Government to deal with the volume of counterfeit medicines are insufficient. In addition, the relevant law enforcement agencies do not aggressively pursue traffickers in counterfeit pharmaceuticals. Real, practical deterrence is an issue because there is often a failure to pursue criminal charges and, when charges are brought, the penalties for counterfeiting are insignificant relative to the profits made from the supply of fake medicines and the resulting harm to human health. Further, the lengthy process required to take administrative action, such as revoking the license of a pharmacy found to be selling counterfeit pharmaceuticals, makes this action ineffective. Historical tolerance towards counterfeit products impedes progress, due in large part to a lack of understanding or awareness among the general public and enforcement officials as to the severity and dangers of the problem.

PhRMA member companies have organized numerous workshops and training seminars to raise awareness among officials, healthcare providers and consumers as to the availability and dangers of counterfeit pharmaceuticals, and how to recognize a genuine from a counterfeit product. However, these efforts have been hindered by overly-restrictive interpretations of drug advertising laws by Thai FDA officials. Such restrictive interpretations have greatly curtailed the ability of pharmaceutical companies to effectively warn patients and pharmacists of the availability and dangers of counterfeit medicines.

PhRMA is pleased that the Thai Government has welcomed, supported and assisted various efforts of pharmaceutical companies to educate officials and the general public; however, the Thai legislature should implement laws with stricter penalties for pharmaceutical counterfeiters. The Thai FDA and law enforcement leadership should provide adequate resources to train and equip Thai enforcement agencies to deal with counterfeiting. Where offenders are convicted, the Thai judiciary should impose significant prison terms in order to create practical deterrence. We look forward to working with the new Government on the realization of an initiative begun in mid-2007 that is memorialized in a Memorandum of Understanding between key agencies in the Thai Government and private sector representatives to facilitate improved enforcement of IP rights and suppress counterfeiting.

Patent Linkage
The Thai FDA does not have a formal patent linkage system to prevent regulatory approval of generic versions of pharmaceuticals that are still covered by a valid patent. Pursuing patent infringers that would have otherwise been denied regulatory approval, results in a significant and unnecessary burden on PhRMA member companies as well as on the Thai court system.

PhRMA and its member companies are concerned that the producers of innovative products are not receiving appropriate notice of generic firms attempting to register and release products that are under patent protection. Patent litigation in Thailand is time consuming and patent holders face significant costs and losses during the period of litigation. Moreover, preliminary injunctions are rarely granted and damages awards generally do not capture the true extent of economic loss to the patent holders. Unfortunately, litigation is often the only available option.

PhRMA encourages Thailand to introduce an effective patent linkage system as soon as possible. In the interim, PhRMA would like to see the Thai FDA play a constructive role in averting litigation caused by premature generic approvals.

Data Exclusivity

TRIPS requires WTO Members to prohibit unfair commercial use of, or reliance on, regulatory data. The widely accepted mechanism for complying with this obligation is a data exclusivity regime which prevents regulatory authorities from prematurely allowing generic producers to rely on or otherwise use the originator’s proprietary data to gain approval of copies of the originator’s drug. To date, Thailand has not implemented an effective system for preventing unfair reliance on the originator’s underlying data to obtain regulatory approval.

The development and introduction of a new drug requires the originator to conduct extensive chemical, pharmacological, toxicological and clinical research and testing, at is a hugely expensive and time-consuming process. The data generated to prove safety and efficacy is proprietary to the originator and enormously valuable.

The Thai Parliament passed a Trade Secrets Act in April 2002 (the “Act”). Chapter 3, Section 15 of the Act provides for the “Preservation of Trade Secrets by Government Entity.” It is the legislative vehicle through which Thailand seeks to meet its obligation to enact data protection consistent with TRIPS Article 39.3.

Although the Act was passed in 2002, the Thai FDA, which is in charge of implementation and enforcement of the Act, did not issue implementing Ministerial regulations until January 30, 2007. A further 16 months is expected before the Ministry of Public Health (MoPH) regulation takes effect. Furthermore, while it protects physical disclosure of confidential information, the official regulation fails to expressly prohibit the Thai FDA or generic drug applicants, for a fixed period of time, from relying on the originator’s regulatory data to approve generic versions of the originator’s product.

Under the new MoPH regulations, protection applies only to data related to new chemical substances (not to new dosage forms, new indications, composition, etc.) that are qualified as trade secrets under Section 3 of the Trade Secrets Act and have never been approved to be registered in Thailand. The term of this physical protection is only five years starting from the date of recordation, not the date of marketing approval as in the laws of other countries. This means that any benefit of the protection is dependent on the efficiency of review by the Thai FDA.

PhRMA believes strongly that these interpretations of Thailand’s obligations will further harm the interests of PhRMA members by, among others, restricting their ability to recoup their investment and fund further R&D. This could result in fewer new medicines being introduced in Thailand and elsewhere in the world.

PhRMA encourages Thailand to implement new regulations that do not permit a generics producer to rely on the originator’s data, unless consent has been provided by the originator, for the approval of generic pharmaceutical products during the designated period of exclusivity.

In addition, the regulations should not differentiate between patented and unpatented products. The regulations should require the Thai FDA officials to protect information provided in confidence by the originator by ensuring that information is not improperly made public or made available for use or reliance by a subsequent producer of a generic pharmaceutical product. The regulations should impose liability for state officials who receive the information and disclose it to third parties or the public.

Patent Delays
It currently takes an average of 8 to 10 years or more to obtain grant of a pharmaceutical patent in Thailand. When combined with regulatory approval delays this negatively impacts the effective patent term available for innovative medicines in Thailand. If undue delays ensue, the patent holder should be compensated with an appropriate extension of the patent term. PhRMA members are concerned that while effective solutions to help maintain reasonable patent prosecution timelines, such as outsourcing, are available, the Thai Department of Intellectual Property (DIP) has not made any substantive progress in remedying the delay.

PhRMA encourages Thailand to join the Patent Cooperation Treaty (PCT), which has been adopted by more than 130 countries. The PCT, enacted in 1970, offers advantages to patent applicants, national patent offices, and the public in the countries that have joined the system, and would be of enormous benefit to Thai inventors. Instead of filing separate national patent applications with the office of each country in which a patent is sought, the PCT allows an inventor/applicant to file one “international” application in one language and to seek protection simultaneously in all its member states. The PCT helps reduce the burden on the patent office substantially as the system offers centralized and detailed, high-value information on which approval decisions can be made without having to locally duplicate the information gathering and evaluation process.

Market Access Barriers

Government Procurement
The Thai Government’s procurement regulations (Articles 60 and 61) require government hospitals to give the pharmaceuticals manufactured by the Government Pharmaceutical Organization (GPO) preference when purchasing medicines. This organization, established by the Thai Government to manufacture medicines in the Government’s name, has rights to an exclusive position in supplying government hospitals with products on the National List of Essential Medicines (NLEM). The GPO, as a state enterprise, is also exempt from prohibitions against anti-competitive practices under Thailand’s Trade Competition Act. PhRMA believes the government procurement regulations give GPO an unfair advantage, and prevent research-based pharmaceutical companies from competing on quality and value in the largest sector of the Thai healthcare market. Moreover, the GPO has on occasion unilaterally refused to distribute products that contain the same basic compound as products manufactured by PhRMA member companies, albeit under a different formulation, even though the products have been documented to offer benefits to Thai patients. These regulations should be revoked because they discriminate against foreign pharmaceutical producers.

Safety Monitoring Program (SMP)

All new chemical entities registered and approved for marketing in Thailand must undergo a mandatory Safety Monitoring Program (SMP) of approximately two years and in some cases up to four years. During the SMP, only doctors in hospitals and clinics can prescribe the medicines, and only hospital and clinic pharmacies can dispense them. In addition, the medicines cannot be sold in drug stores and cannot be included in the NLEM. This last requirement prevents sales of a subject medicine from being reimbursed under the government-subsidized medical benefit schemes, such as the Universal Coverage (UC-Free services), Social Security Scheme and Civil Servant Medical Benefit Scheme. Once the Thai FDA has granted marketing approval there are no legitimate safety reasons for restricting distribution. Because the medicines under SMP are not reimbursed by the Government, they are rarely prescribed by doctors for public sector patients. Indeed, by restricting distribution, and therefore the medicine’s use in patients, this policy diminishes the benefit and the intent of SMP, which is to monitor the safety profile of the medicine in a larger population. In addition, this policy severely restricts PhRMA member companies’ access to the Thai market and restricts Thai patients’ access to the newest therapies.

New Draft Drugs Bill
The Thai FDA has demonstrated its intention to request, as part of the marketing approval process under the new draft Drugs Bill, information related to the medicine’s patent status and its price structure. PhRMA members believe that the Thai FDA may unnecessarily and inappropriately use this information to narrow the criteria for new drug registration by focusing on patent and cost considerations over safety and efficacy. The language of the draft Bill is vague and ambiguous, and could result in arbitrary rejections of new drug applications because of a subjectively “improper or unworthy price structure”. If this new Bill passes, it could become a serious trade barrier to PhRMA member companies and restrict Thai patients’ access to new innovative medicines.

PhRMA strongly recommends that the Thai FDA remove such provisions from the draft Bill to promote free trade and the efficient introduction of new medicines into the market, as well as to ensure that Thai patients have access to safe, effective, high-quality innovative medicines.

Product Liability Act
The Product Liability Act was rapidly passed by the National Legislative Assembly in December 2007, and will become effective on 20 February 2009. As it stands, the Thai Government enforcement body has stated that it will consider drugs and medicines being tested in clinical trials in Thailand as potentially liable under the Product Liability Act, which could create a disincentive for companies to enter the market and conduct trials in Thailand.

Damage Estimate
At the time of reporting PhRMA is not able to provide a specific estimate of the damages incurred in 2008 attributable to trade barriers related to intellectual property protection and market access.