Thailand Law Journal 2012 Fall Issue 1 Volume 15

TRIPS Compliance

While addressing the issue that the Thai government’s actions were considered as forms of ‘uninformed expropriation of private property’, especially considering they decided not to prior negotiation, the Thai Government firstly pointed out that for Government Use, there was no requirement of prior negotiation. Further, the Government also identified that they had attempted to conclude certain negotiations to reduce prices in the past, specifically the Department of Disease Control. The Thai Government found that the reductions which had been agreed to by the originator companies were insubstantial considering the appreciation of Thai currency. Finally, they gave the example of Fluconazole, which is the anti-fungal for opportunistic infection in AIDS patients, which after the expiry of its monopoly, has seen a price reduction of more than 50 times. Finally the Thai government concluded by saying that engaging in prior negotiations in a waste of time, and extremely inefficient in its functionality to save lives.  The Thai Government repeatedly stresses on the fact that the application of these purchased drugs cannot extend to those people who are undertaking to access services from private service providers. 

CONTROLLING Possible Grounds of Misuse

Regarding the issue of Diversion, wherein the drugs which have been procured by the Government might be routed through the patients selling the drugs to pharmacies or private hospitals, the Thai Government had represented that the available safeguards included that the four licensed drugs had a strict prohibition on over-the –counter sale, and are to be available only  by medical prescription .

As regards the issue of the quality of those drugs applied in Government Use, it has been identified that where the WHO has a system for prequalification, the same will have to be satisfied apart from the registration requirement by the Thai FDA and the bioequivalence study and the post-marketing surveillance carried out by the Thai FDA, Disease Control Department and the National Health Security Office.

With respect to the need for prior negotiation, the Thai Government has identified the need for the same as only related to commercial use. The Thai Patent Act has made allowances for two provisions, namely Section 51 and 52 which refer to the ‘Public Use of Patent Rights’ under which, the government may after paying a royalty to the patentee without the requirement for prior negotiation on either the permission, the royalty fees or the term of patent use (Section 51, Thai Patent Act). The second identified condition deals with any state of war of emergency wherein the Prime Minister is allowed to issue an order to exercise any right under any patent necessary for the defense and security of the country by paying a ‘fair remuneration to the patentee’ (Seciton 52).

Thailand’s issuance of a compulsory license for Plavix, a blood thinning drug for cardiovascular diseases was identified by Brent Savoie as ‘…[a] signal [for] the beginning of a new era in the use of compulsory licensing to address access to pharmaceutical interventions for chronic diseases’. The author has differentiated between the different modes of transmission of diseases and identified that chronic diseases could persist over a certain extended period of time . Thailand while issuing the compulsory license for the drug Plavix, justified the same on the ground that the drug had been priced so high as to render it expensive even for the government’s health plan. This issuance was done through the “public non-commercial use” provision under Article 31 and not the oft-used “national emergency or other situation of extreme urgency” provision. Abbott industries and lobbyists for the pharmaceutical industry have pointed out that Thailand is a mid-income country and the disease was a chronic disease.

The Price Differential Consideration

The aspect of price difference was further considered by the court while it stated that  the factor gained importance in case of a life-saving drug. In Hoffman Roche v. Cipla , the defendant’s product Erlotinib was sold at Rs. 1600 per tablet, whereas the disputed cost of Roche’s Tarceva was anywhere between Rs. 3,200 and Rs. 4,800 per tablet. Hence, the price differential was 3-4 times .

Hence, the Thailand experience was crucial in illustrating the use of TRIPS flexibilities in diseases which though not traditionally identified for protection under TRIPS. Further now, it is pertinent to consider the lessons gleaned from the 2009 Swine Flu epidemic considering Roche has attempted to hold the monopoly over the drug Oseltamivir Phosphate. There are important considerations considering the drug is one which has to be used within 48 hours of contracting the infection in order for it to be effective. Borrowing from Thailand experiences, a compulsory-license or some other mode of ensuring a constant supply of the second-line drug Relenza becomes essential.

India   - Injunctions as a form of remedy

As identified in the beginning, there are various modes of ensuring access to drugs – India has a provision Section 3(d) in the Indian Patent Act, 1970 which deals with the level of “inventive step”. It is still as issue as to whether imposing an additional condition is violative of TRIPS Article 27.1. In India, so far, there has been no issue of compulsory licenses. Nevertheless, there has been  ensured positive access to medicines and health facilities as dictated by the norms of the Indian Constitution in Article 21 of the Indian Constitution dealing with the Right to Life, due to every single person. Further, the Directive Principles of State Policy enjoin that health is a concern of the State. The Indian judiciary has been active in thwarting interference with the access to drugs, without granting a compulsory license, especially, where a patent’s validity has not been established. There are multiple cases in India, where the grant of a patent is opposed, and the competing party goes on to continue manufacture of the drug. In these cases, the patent-holder generally approached the court for an injunction. Here, the court is required to consider the factors essential for the grant of an injunction. However, with specific reference to pharmaceuticals, sometimes, it becomes essential to give high priority to the ‘Balance of Convenience’ reason by considering ‘Public interest’ as an overwhelming concern.

Remedy for a Patent-Holder: grant of an injunction

The general principles regarding the grant of the permanent injunctions are further extended into application for patent cases. This is in accordance with 35 U.S.C. Section 283 which states that in the Patent Act, injunctions “may” be issued “in accordance with the principles of equity”. The court also observed that these principles embodying the owner’s exclusive rights in property are further extended into copyright law and patent law.  The court in eBay v. MercExchange considered two cases in order to assess the application of the principles of equity with respect to the grant of a permanent injunction. The case of Roche Products v. Bolar Pharmaceutical Co ., noted that courts have considerable “discretion” in determining whether the facts of a situation require it to issue an injunction. However, in the case of Continental Paper Bag Co. v. Eastern Paper Bag Co ., where it had been raised that a court of equity would have no jurisdiction to grant injunctive relief to a patent holder who has unreasonably declined to use the patent. The Court of Appeals in that matter observed that in the case of claiming a permanent injunction in a patent dispute, it is essential to first adjudicate on the infringement and the validity. In Hoffman v. Roche, the court while holding that the plaintiff could not be granted the ad-interim injunction, still observed that there might be a prejudice to the plaintiff’s interests at the time of the conclusion of the infringement suit – hence the defendants were required to pay damages and bind themselves to maintaining accounts of the sale of the product Erlocip and further file annual statements of the sales figures of Erlocip.