Draft Trade Secrets Law: Thailand is preparing a new trade secrets law to comply with TRIPS. Unfortunately, Section 11(4) attempts to exclude disclosure of trade secrets by a government agency to protect any "public interest" not having commercial objectives. This is intended to allow the use of registration data for generic regulatory filings.

Parallel Imports: The Thai pharmaceutical market suffers a relatively high level of parallel imports from other parts of Asia, yet neither the Thai FDA nor other authorities has moved to rectify this situation, despite the dangers that such imports pose to national health. There is recent evidence the Thai FDA is being slightly more diligent in enforcing restrictions on parallel imports, however due to inefficiencies and corruption in enforcement, the real progress has been minimal.

Barriers to Market Access for Patented Pharmaceutical Products

Discriminatory Duties: Drug and raw material imports are subject to duty which currently ranges from 10 percent to 30 percent. (In the recent economic stimulation initiative, the duty for certain intermediate hormones was reduced to 1 percent). The duty rate for drugs where a generic equivalent is not manufactured in Thailand is normally 10 percent. The duty rate for imported finished goods that compete with locally manufactured product is 20 percent to 30 percent.

Restrictive Formularies: While there are no specific policies which mandate "BUY THAI", the government hospitals are strongly encouraged to buy local produced products where ever possible. The "Buy Thai" policy which PhRMA cited in its NTE submission in November 1998 is therefore no longer official. There are still some restrictions on access, but the "Buy Thai" policy is not in effect as it was originally announced by the RTG.

While there is no "official" "Buy Thai" policy, it is clear that with the formulation of the new National List of Essential Drugs (NLED), there will be significant limitations on hospitals' purchasing power. The new NLED is a "maximum list," from which government hospitals are expected to select their individual hospital formulary. The new NLED, introduced in early 1999, is now restricted to approximately 1400 drug items and in principle is subject to the median price policy. The median price is established by surveying the purchases for a drug form/strength and setting the price at the median. This favors local generic producers and pays no consideration to product quality, Good Manufacturing Practices (GMP), or contribution to product research and development. It should be noted that while the government has the information needed to specify the median price for the NLED drugs, they have not yet implemented this aspect of the ED.

In 1998, the Thai Ministry of Public Health (MOPH) established a Subcommittee to review and revise the existing National List of Essential Drugs (NLED). The NLED has become a maximum list for government hospitals. Products with "provisional registration" subject to a "Safety Monitoring Protocol" (SMP) (i.e., Thailand's form of pipeline protection) are all excluded from the NLED list.

The ambitious MoPH plan is to update this list every six months; the second version of the NLED is expected to be introduced in late 1999. The original list had been in place for several years. The old NLED was an adaptation of the WHO 'essential drug list' (designed as a minimal list of drugs that should be available to satisfy basic health care needs in developing countries.) Historically, because of the severe price restrictions and control of NLED products, companies avoided applying for listing on the National List and sought listing on individual hospital formularies since there were previously no restrictions on having products prescribed and reimbursed within the hospital system.

The intention of the 1994 Thai FDA Rules on 'Transitory Provision to Conduct Safety Monitoring and Bioequivalence Study of New Drug', to provide pipeline protection for pharmaceutical products patented elsewhere in the world between 1 January 1986 and 30 September 1991 is clearly stated. The procedure required companies to report adverse reactions for a two year period. If requested by the company this could be rolled over for a further "two plus one" year reporting periods during which time the FDA would not accept a registration file for a generic copy. The rules provided up to five years market exclusivity; the only restriction being that sales were restricted to hospitals and clinics (i.e., no drugstore sales).

To gain access to the NLED, PhRMA member company affiliates will have to provide data to show that new drugs are safe for use in the Thai population, so that the rules of the Safety Monitoring Protocol (SMP) need not apply. Drugs will not be listed on the NLED if they are subject to a SMP. The research-based pharmaceutical industry hopes that data from other Asian countries will suffice to meet this requirement to demonstrate safety outside of the SMP.

If so, the research-based industry in Thailand should be able to cut the length of the SMP to a few months, gain access to the NLED and be able to sell to drugstores (which sales were embargoed under the SMP

The treatment of the NLED as a maximum list and the exclusion of the opportunity to have SMP drugs included in the list, however, effectively negates the original intent of the provisions to provide pipeline protection and market exclusivity for new products in Thailand. Innovative products qualifying for the SMP will not be listed or stocked in most hospitals.

PhRMA believes that the Thai Government's removal of the opportunity to market new products through government hospitals is tantamount to setting up a market access barrier to the introduction of new products in Thailand.

Standards, Testing and Labeling Requirements: Recent amendment allows companies to use CFS from country other than the country of manufacture. Samples of the new drug must be submitted to the Thai Department of Medical Science for analysis prior to acceptance of registration filings. This analysis usually takes 6 months. Once the file is received, the FDA can take up to 18 months ensuring that it is complete, to its satisfaction, before submitting the clinical work to the Review Committee for consideration. The Committee may ask additional questions or require that a local study be carried out to ensure that the clinical data can be duplicated in Thailand by Thai national companies under local conditions.

The Ministry of Public Health has eliminated the requirement for sample analysis before filing of registration dossiers. The Ministry still requires a CFS to allow filings for imported products. A CFS is not required for regulatory filings where the product is locally produced. PhRMA believes this is in contravention of WTO principles of national treatment.

National Treatment: This organization continues being, to a large extent, exempted from registration and Good Manufacturing Practice requirements and has rights to an exclusive position in supplying government hospitals with products on the National List of Essential Drugs. PhRMA believes this also is in contravention of WTO principles regarding national treatment.

Damage Estimate

PhRMA is currently studying methodology for estimating damages caused by the aforementioned trade barriers in Thailand (See Appendix B). As a provisional estimate, on the basis of Thai sales data and from estimates based on the size and buying power of the Thai population, PhRMA estimates that the potential market for its companies could more than double current market share of approximately US$30 million.