Resident Fellow  Roger Bate

In September 2006 the former Thai government was overthrown in a largely bloodless military coup. Since then its replacement has flexed its muscles internationally, creating a war with Western companies. In November 2006 and then more expansively in February 2007, Thailand defiantly threatened to cancel the patents of Western companies, with little or no consultation, and make cheap copies of up to 21 drugs to combat cardiovascular disease, leukemia, high cholesterol and HIV, amongst other diseases.
 
Even Dr. Margaret Chan, the Director General of the World Health Organization (WHO) was shocked by Thailand's move. Back in February, when she visited Thailand, she cautioned against such hasty action: "I'd like to underline that we have to find a right balance for compulsory licensing. We can't be naïve about this. There is no perfect solution for accessing drugs in both quality and quantity." Whilst not a ringing endorsement of Western patents, it is a surprisingly balanced statement from the head of an organisation, which likes to be seen as hostile to Western pharmaceutical companies and friendly to left-wing health activists.
 
So, whilst it may be a noble goal for the Thai public health minister, Mongkol na Songkla, to treat more poor and suffering Thais with cheaper drugs, success in healthcare requires more than just gestures. He will probably discover that cheaper drugs do not make cheaper healthcare if they don't work properly.
 

And it's possible that the gesture is not even that noble, with Thai officials simply putting industrial policy ahead of public health; increased domestic production of copy drugs is likely to benefit officials in Bangkok more than the poor who have to take them. Indeed, the Thai Government Pharmaceutical Organization's (GPO) revenues continue to rise, alongside alleged corruption. In 2002, the auditor general, Jaruvan Maintake, said, "The purchase of drugs through GPO . . . gives officials the chance to reap personal benefits. . . . The drug-purchasing process becomes untransparent, inefficient and wastes money." Mr. Maintake is presently investigating the finances of deposed Prime Minister Thaksin, who was more friendly towards Western interests, but may well have been corrupt.
 
Thailand's health ministry plans GPO production and sale of the drugs to Thai hospitals. This is not good news for Thai patients because the GPO's track record of drug quality is very poor.
 
Over 80,000 Thai patients are on the GPO's own HIV drug cocktail GPO-vir. But a 2005 study by Thailand's Mahidol University's faculty of medicine found at least 40% and up to 59% resistance in the 300 patients  investigated. The GPO facilities manufacturing HIV treatments have still not yet passed the World Health Organization's production standards, nor has GPO-vir passed bioequivalence tests. Even the Global Fund to Fight AIDS, Tuberculosis and Malaria, which has arguably shown enormous tolerance of the GPO, finally withdrew financial support last August. For over two years it had funded production of GPO-vir.
 
Resistance to first-line drugs has a disastrous effect on costs: Medecines Sans Frontières (MSF) estimate the increase to be from $24 per person per month to $239 for second-line therapies. Remarkably, MSF still think GPO-vir is a valuable drug, but at least the Global Fund and the WHO no longer do. It must be of concern to the WHO's Dr. Chan that with wider compulsory licensing more patients will receive failing drugs.
 
But Thailand's public health minister said compulsory licences were necessary to ensure access for patients in Thailand's universal healthcare scheme: "We don't have enough money to buy safe and necessary drugs," he said. But can he afford cheap ones?
 
Western drugs may be more expensive than copies, but their high quality limits drug resistance and treatment failure. Originator companies also make efforts to minimise treatment failure by training medical staff to ensure patients get regular and consistent medication. And what is true for HIV drugs is equally true for drugs to treat other diseases.
 
World Trade Organization rules have made compulsory licences available to poor countries suffering an epidemic. But Thailand is a middle income country, and, while a case may be made for HIV, heart disease, cholesterol and leukemia are not epidemics. If the international community allows patent-busting under these circumstances, it will embolden activists to undermine the entire pricing structure of innovator companies, and with it the opportunity of drug discovery.

Roger Bate is a resident fellow at AEI.