Dear Ambassador Barshefsky,

We are concerned that the National Trade Estimate Report on Thailand that PhRMA has submitted to the US government will negatively influence the year 2000 USTR NTE report. We are writing to ask the USTR to abstain from its previous "TRIPS PLUS" approach and to carefully review the accusations on Thailand that PhRMA has made.

The PhRMA report claims that Thai law is still not TRIPS compliant in many points. 1. Regarding Section 9(1) of the Patent Act. The Report suggests that the provision is against the TRIPS Agreement since it excludes naturally existing biologicals. Art. 27.3(b) of the TRIPS authorized the Member states to exclude living organisms other than microorganisms. Thai law does not exclude all kinds of microorganisms but only those organisms that exist in nature. This is not against the spirit of the international agreement as microoganisms that are not technically created are not considered invention. They are merely discovery and no country's law protects discovery.

2. The PhRMA report attacks the Bolar type provision that is part of patent law in many countries. As to Section 36(4) of the Thai Patent Act, the law exempts from patent infringement the use of patented products for market approval during the duration of the patent. This is again not contrary to TRIPS because the patent holder continues to enjoy market exclusivity during the patent term. The use of patented products for clinical trials is further not a commercial use and does not affect the patent rights. Generic drugs can be released into the market only after the patent expires. Without Bolar provisions patent protection is in practice unfairly extended beyond the current 20 years.

3. PhRMA comments that absence of local working is reason for compulsory license in Thai law. It is true that failure to manufacture the patented product in the country is one of the grounds for the application of compulsory license under Section 46 of the Thai Patent Act. However, we do not believe that TRIPS obliges member states to recognize importation as sufficient working of the patent. Following active USTR intervention the Thai government adopted regulations in 1993 that restrict the use compulsory license as to Section 46 of the Thai Patent Act. These regulations broadly exclude many reasons for compulsory license, including importation and go far beyond TRIPS requirements.

4. We disagree that the provision on dependent compulsory licenses is not in line with TRIPS. Art. 31(j) of the Agreement states any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in the Member". Though the Thai law does not provide for judicial review in this case, the affected party is able to appeal the decision to grant a compulsory license to the Patent Board, which comprises representatives from various sectors and is absolutely independent from government control.

5. As to Section 6(4), Thailand recognizes a 12-month priority period for foreign applications, not 18 months as mentioned in the PHRMA report. This is found in Section 19 B of the Thai Patent Act, not in Section 6(4). Section 6(4) applies the 18-month period because in most countries patent applications are published for public scrutiny after 18 months from the filing date. This is a normal practice in most countries and is within the scope of TRIPS.

6. Regarding the Draft Trade Secret Law, the public interest" provision can be found in all countries' intellectual property law. We are surprised that PHRMA considers this provision illegal.

7. PhRMA mispresents facts on parallel import in Thailand and speaks of "the dangers that such imports pose to national health". PhRMA confuses illegal smuggling of counterfeit drugs into Thailand with the legal parallel importing under the supervision of the Thai FDA. All imported drugs need to be registered with the FDA and are assessed according to quality, safety and efficacy. Section 36(7) of Thai Patent Law now authorizes parallel importation. "The TRIPS Agreement explicitly states that if a country allows parallel imports - that is, imports of goods already put on the market in another country with the right holder's authorization - those practices cannot be challenged under the Agreement" (Text of the official WTO booklet to the Seattle meetings).

8. PhRMA complains that drugs still under the Safety Monitoring Program can not be included in the National List of Essential Drugs (NLED). PhRMA believes that the Thai government is setting up market access barriers by using the NLED as a maximum list for government hospitals and by setting maximum prices for drugs in the NLED.

a) Making the NLED a minimal rather than a maximum list in public hospitals as PhRMA suggests would undermine the very concept of an essential drug list as is it is promoted by WHO. The rationale for the use of a limited number of essential drugs is that it leads to an improved supply of drugs, more rational prescribing and lower costs.
b) Following pressure by the USTR the Thai government is since 1994 providing 5 years of market exclusivity as pipeline protection of drugs, eventhough the Thai Patent Law was amended to grant patent for pharmaceutical products. This protection is given under the cover of the Safety Monitoring Program (SMP) implemented since August 22, 1989 that provides extremely limited safety data due to the passive monitoring system; so far SMP has in no case detected safety problems that were not reported earlier in other countries. Pharmaceutical companies were thus given pipeline protection and "safety monitoring" purely to grant market monopoly; how can PhRMA now demand that provisionally registered pipeline drugs which are not completed the SMP should be included in the NLED?
c) WTO states that the obligations of the TRIPS Agreement do not stand in the way of price controls and similar types of measures for pharmaceuticals" (WTO booklet for the 1999 Seattle meetings, http://svca.wto-ministerial.org/english/book_e/stak_e_7.htm). This view was also supported by the former USTR, Mickey Kanter. Price controls are used widely in all of Europe, Canada, Australia and New Zealand. So far Thailand has made no significant use of price control. As an example, Didanosine (ddI) is on the NLED but is not affordable for the majority of patients and has therefore been under discussion for compulsory license. Didanosine. Many other drugs on the NLED are reimbursed only for a small group of people covered currently by social insurance.

Pharmaceutical companies have repeatedly emphasized that public health policy rather than price is the main obstacle to insufficient access to medicines. PhRMA here actively attempts to undermine good, WHO recommended standards of national drug management.

9. Import Policy: There is no policy which says "buy Thai". The hospitals are encouraged to buy products based on cost-effectiveness evaluation not only be locally produced products.

10. The requirement of a Certificate of Free Sale (FSC) for imported drugs does not constitute preferential national treatment since it helps to ensure quality, safety and efficacy of imported drugs. Locally produced drugs are predominantly for the Thai market and a Certificate of Free Sale (FSC) can not be required; these drugs can be more easily assessed locally.

We are seriously concerned that PhRMA policies negatively affect public health in Thailand if given impact on the USTR NTE report. We urge the USTR to consult with DHHS on this issue as was announced by President Clinton during the 1999 Seattle meetings.

Sincerely,

Jakkrit Kuanpoth, PhD
Associate Professor, School of Law
Sukhothai Thammathirat University, Thailand

Jiraporn Limpananont, PhD
Associate Professor, Faculty of Pharmaceutical Sciences
Chulalongkorn University, Thailand

CC:- Royal Thai government: Office of the Prime Minister, Ministry of Public Health, Ministry of Commerce, Ministry of Foreign Affairs,

- NGOs: Drug Study Group (DSG) Thailand, sum120@hotmail.com; AIDS Access Foundation, ungjon@usa.net; ALDEN House, alden@ksc.th.com; Foundation of Consumers, saree@health.morph.go.th; Rural Pharmacist Association, jitsiri@newmail.net; Medecins Sans Frontieres, Drugs Bangkok, msfdrugs@asianet.co.th; Consumer Project on Technology, USA love@cptech.org; Health Action International (HAI), HAI@HAI.ANTENNA.NL .