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Cablegate: New Health Minister Promises Review On Compulsory

VZCZCXRO7977
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #0488/01 0451014
ZNR UUUUU ZZH
R 141014Z FEB 08
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 1824
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGV/USMISSION GENEVA 1967
RUCPDOC/USDOC WASHINGTON DC

UNCLAS SECTION 01 OF 03 BANGKOK 000488

SIPDIS

SENSITIVE

SIPDIS

STATE PASS USTR
USDOC FOR 4430/EAP/MAC/OKSA

E.O. 12958:N/A
TAGS: ECON ETRD KIPR TH

SUBJECT: NEW HEALTH MINISTER PROMISES REVIEW ON COMPULSORY
LICENSES

1. (SBU) Summary: Thailand's new pro-business government has
quickly announced plans to review the previous administration's
controversial policy of issuing compulsory licenses (CLs) on
patented medicines. In his last days in office the outgoing Health
Minister paved the way for continuation of the CL policy, signing
four more CLs on cancer drugs, following on three other CLs issued
over the previous 16 months. The new Minister promised to review
the legality of procedures followed and the appropriateness of the
policy. He has suggested that doing away with CLs is needed to
stave off trade sanctions from a negative Special 301 review. At
the former Minister's request, a WHO-led delegation is also carrying
out a review of the CL procedures but said it does not plan to issue
a judgment on whether procedures in WTO rules and Thai law were
followed correctly. End summary.

2. (SBU) On his first day in office on February 7, newly
inaugurated Minister of Public Health Chaiya Sasomsab promised to
review his predecessor's policy of overriding patents on
pharmaceutical products. In a February 12 Cabinet meeting, PM Samak
approved the review and instructed Deputy Prime Minister and
Commerce Minister Mingkwan Saengsuwan to meet with MFA and Health
Ministry officials to discuss the CL policy and review past
decisions. Minister Chaiya indicated the review would be completed
by March 30.

3. (SBU) During his 16-month term in the coup-installed government,
former Minister Mongkol na Songkhla issued three compulsory licenses
(CLs) on patented anti-retrovirals (for AIDS treatment) and a blood
thinner, citing unreasonably high prices and the inability of
patients to afford the medicines. In his closing days in office,
Mongkol signed authorizations for CLs on four more drugs used to
treat cancer patients, though the Ministry has yet to implement the
licenses by importing generic copies. The four drugs include
Novartis' breast cancer drug letrozole and its leukemia and
gastrointestinal cancer drug imatinib, Sanofi-Aventis' breast and
lung cancer drug docetaxel, and lung cancer drug erlotinib from
Roche. (Note: U.S. companies manufacture two of the three drugs
originally affected by CLs, the most recent three are made by
European pharmaceutical companies.) Although MOPH issued a CL for
imatinib, the Ministry stated that it would not exercise the CL
unless there were access problems under Novartis' Glivec
International Patient Access Program. Under the GIPAP program, MOPH
negotiated a deal for free access to imatinib for any Thai patient
who has an income of less than 1.7 million Baht per year. The only
CL implemented thus far is for Merck's efavirenz, though Merck
claims that the number of patients using the generic product is a
small fraction of the number that Minister Mongkol claimed would be
served. Other already issued CLs may be difficult to implement. It
is not clear whether a generic exists for Abbott's Aluvia, and
Sanofi-Aventis is engaged in a protracted legal battle in both
Thailand and India over implementation of the CL for Plavix.

4. (SBU) Although Minister Chaiya was not specific on the scope of
the upcoming review, the pharmaceutical industry expects it will
consider whether to proceed with the three CLs on cancer drugs, but
not necessarily on whether to withdraw the three CLs already
implemented. Chaiya earlier told journalists that he would review
whether the Ministry had followed the correct procedures in issuing
the compulsory licenses, saying, "It might have been a politically
correct decision, but not legally correct." Chaiya reportedly
instructed health officials to determine whether the Cabinet had
approved the policy before the compulsory licenses had been issued,
or had been notified after the fact. Chaiya also said he would like
to determine whether the number of patients needing the medicines
and their access to them necessitated issuing CLs. Representatives
of drug manufacturers would be invited to discuss the legal aspects
of the decision as well as the commercial impact. As reported in
the press, health activists met with the new Minister on February 8
and protested the plans to review the policy, saying that Thai law
had been appropriately followed. More protests have followed on a
daily basis.

5. (SBU) The Ministry of Public Health (MoPH) under the former
Minister posted a 56-page report on its website explaining the
decision behind the three additional CLs on cancer drugs, citing
30,000 deaths annually from cancer in Thailand and the high expense
of the drugs used to treat patients. The report paints a portrait
of extensive efforts to negotiate transparently with pharmaceutical
companies to reach agreement on prices, and frequent consultation
with other RTG ministries. Industry takes a different point of
view, claiming that the MoPH did not negotiate in good faith,
refusing to budge from its initial demand of companies to lower
their prices to within five percent of generic prices. MoPH's
estimate of the number of patients that could be treated with

BANGKOK 00000488 002 OF 003


generic medicines is substantially higher than industry's
estimates.

New government takes new tack
-----------------------------

6. (SBU) As a newcomer to the health field, Minister Chaiya's own
views on the appropriateness of the previous government's CL policy
are unknown. The coalition leader People Power Party has espoused a
pro-business philosophy, has promised to review and revise some of
the previous government's other controversial economic policies, and
may do the same with CLs. In Chaiya's recent statements he has
suggested replacing the CL policy with an increased budget to cover
essential drugs for those who cannot afford them. Minister Chaiya
recently cited concerns over the U.S.'s upcoming Special 301 review
on Thailand's protection of intellectual property as a motivation
for initiating the CL review. Local press reported that Chaiya
named the CLs as the main reason for last year's downgrading of
Thailand to the Special 301 Priority Watch List, and blamed that
downgrading on Thailand's loss of certain trade benefits of the U.S.
Generalized System of Preferences (GSP) program. He said he was
concerned that the budget savings from using CLs would not match the
losses in trade benefits.

7. (SBU) Chaiya's characterizations of last year's changes in the
GSP program and the PWL decision are inaccurate, but his views are
widely shared by the Thai public and within the RTG. Despite
numerous meetings between U.S. Embassy officials and Ministry of
Commerce officials explaining the graduation process in the GSP
program and its lack of a relationship to the Special 301 decision,
officials at the Department of Intellectual Property (DIP) continue
publicly to cite CLs as a prime reason behind both the PWL decision
and Thailand's loss of GSP benefits.

WHO does its own review
-----------------------

8. (SBU) At the request of the former Health Minister, a delegation
led by the World Health Organization and joined by officials from
the WTO, UNDP, UNCTAD and academic advisors visited Thailand last
week to review the procedures followed in issuing and implementing
compulsory licenses. In a February 6 meeting with Embassy officials
from the U.S., EU, Switzerland, Australia and Brazil, the delegation
said their mission was guided by World Health Assembly resolution
60.30 to provide technical and policy support on flexibilities
provided in WTO rules to promote access to medicines. Although the
delegation said they would be providing policy advice, WHO's Dr.
German Velasquez said they could not comment on Thailand's domestic
matters, and declined to describe their findings thus far on the
procedures followed by Thailand in issuing the CLs. The delegation
said they would be issuing a report "within ten days," but that it
would be released only to the RTG and not to other WHO member
governments. Delegation members insisted their report would be
factual and would not judge the appropriateness of the policy one
way or the other. Comment: Without a wider distribution of the WHO
report, there is concern that the report may be selectively quoted
by partisans to manipulate the CL debate. End comment.

9. (SBU) In addition to RTG health officials, the delegation also
met with health activists and separately with the pharmaceutical
industry. Industry representatives spoke positively about the
meeting as the delegation allowed substantial time for them to
detail their complaints of the RTG's lack of transparency,
communication and due process during the CL process. However,
industry was unable to elicit much information about the progress of
the delegation's review. Privately, one of the delegation's members
said there were notable discrepancies between industry's and the
RTG's recounting of events.

Next steps
----------

10. (SBU) The European Union's representative informed Embassy that
his mission had drafted a letter for EU Commissioner Mandelson's
signature requesting the new Health Minister to "take a fresh look"
at the CL policy. The local EU rep has suggested that the U.S.
coordinate on a joint letter to the Minister or to send its own
separately.

11. (SBU) In a meeting with DCM on February 13, representatives
from U.S. pharmaceutical companies said they hoped the new
administration would continue the Joint Committee between industry
and the Ministry of Public Health to work on improving public
health, including access to medicines. Future meetings would depend

BANGKOK 00000488 003 OF 003


on a green light from the Minister. Industry also plans more public
relations activities, including a life science innovation
conference. Companies are preparing to work more closely with local
press, and will introduce a set of "advertorials" explaining the
health contribution to Thailand of a number of drugs.

Comment
-------

12. (SBU) It is apparent that before leaving office former Minister
Mongkol did all he could to force the hand of the new government on
the CL issue. However, the new government appears keen to ease the
minds of a rattled business community, and has placed among its top
priorities addressing issues that concerned foreign investors during
the coup government. The government may quietly shelve the
compulsory license policy as a step in that direction. However, it
may not withdraw the three compulsory licenses that have already
been implemented, which were among the few popular actions taken by
the last government.
JOHN

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