Healthy Skepticism Library item: 8912

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Publication type: news

Zamiska N.
Abbott Escalates Thai Patent Rift
Wall Street Journal 2007 Mar 14A9
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Full text:

Firm Pulls Plans To Offer New Drugs In Spat With Regime

A decision by Abbott Laboratories not to launch any new medicines in Thailand raises the stakes in a growing battle over patents between multinational drug companies and the country’s military-installed government.

The unusual tactic also puts Abbott in the awkward position of refusing to sell drugs for sick people in Thailand in order to protest the actions of the country’s government.

The drug maker said it has withdrawn its drug applications from the government-review process after the government revoked the company’s patent for its blockbuster AIDS medication. Abbott has no plans to stop selling drugs that are on the market.

The Thai government, which took power following a military coup last year, said in January that it would suspend patent protections for two drugs in order to make them more widely available to patients who need them. These were the AIDS treatment Kaletra, made by Abbott, based in Abbott Park, Ill., and Plavix, a blood-thinning drug originally developed by Sanofi-Aventis SA, of France, and co-marketed in several countries by New York-based Bristol-Myers Squibb Co.

In certain situations, including national emergencies, World Trade Organization rules allow a government to unilaterally make or sell patented drugs without the permission of the drug companies. However, pharmaceutical companies have criticized Thailand for stretching the scope of those rules.

Because the Thai government “decided not to support innovation by breaking the patents, Abbott will not submit applications or register new medicines and will withdraw current applications in Thailand until the government changes its position,” said Jennifer Smoter, a spokeswoman for Abbott.

Abbott has withdrawn its applications for seven medicines, including a new formulation of Kaletra, the AIDS treatment, according to Ms. Smoter. Abbott notified the Thai government a few weeks ago, after talks between the two sides broke down, a person familiar with the matter said.

Abbott risks drawing criticism for a decision that may keep lifesaving drugs from patients who need them.

“It’s not good for anyone, even the American company, because they will lose the market,” said Thawat Suntrajarn, director general of the Ministry of Health’s department of disease control, who said he was unaware of Abbott’s decision. Dr. Thawat said the Thai government would continue to seek generics makers able to produce the equivalent of Kaletra.

“I’m actually lost for words, if they really are going to do this,” said Paul Cawthorne, the head of the Thailand operation of Doctors Without Borders, which has campaigned for access to cheaper medicines. “For me, it’s just evil. It’s appalling. If they really are going to do this, it reflects so badly on the multinational companies.”

Mr. Cawthorne said that in recent months, Abbott assured him the new formulation of Kaletra would be made available in Thailand by this summer.
Older AIDS drugs are often left ineffective as the virus that causes the disease evolves. Abbott says it won’t pull the older version of Kaletra from the Thai market. It adds that both versions of the drug are equally effective; the prime difference is that the new version is more convenient to take.

Abbott sells a yearlong supply of Kaletra to Thai patients for $2,200, less than half the $7,000 that the drug costs patients in the U.S., according to the company. Abbott sells the drug at an even-deeper discount, $500 a person a year, in certain countries in Africa, including Malawi and Kenya. The
News: Abbott won’t launch new medicines in Thailand after the government revoked a patent for its AIDS medication. The Consequence: The company risks criticism for a decision that may keep life-saving drugs from patients who need them. The Concern: Industry executives say the decision effectively steals drugs from the companies that own them.

While Abbott has clashed with governments before, its decision to not sell some new drugs in Thailand is unusual. In July 2005, the U.S. company reached an agreement with Brazil that lowered the price of Kaletra while preserving the company’s patent on the drug.

Pharmaceutical executives say the Thai government’s decision, which they say effectively steals the drugs from the companies that own them, has left the industry with little choice.

“What the government is doing is very shortsighted,” said Teera Chakajnarodom, president of the Pharmaceutical Research and Manufacturers Association, an industry group in Bangkok. “The patients will need newer generations of antivirals” for treating AIDS but won’t have access to them, he said. “This is serious for the health care of Thailand in the future.”
Dr. Teera said he was told yesterday by Abbott of its decision to withdraw its applications.

It is unclear whether other big pharmaceutical companies doing business in Thailand will follow Abbott’s lead.

“They are all looking at” the situation, said Robert Broadfoot, managing director of Political and Economic Risk Consultancy Ltd., based in Hong Kong. While none of the companies like what is going on, “they all want to do business in Thailand, but it’s got to be on what they consider acceptable terms,” he said.

Mr. Broadfoot said he doesn’t have any pharmaceutical companies as clients but speaks with executives in the industry.

Jean-Marc Podvin, a spokesman for Sanofi-Aventis in Paris, said it was “too soon to tell” whether Sanofi would follow Abbott’s lead, adding that Sanofi is “evaluating the options.”

Write to Nicholas Zamiska at nicholas.zamiska@wsj.com