Thailand's Ministry of Public Health indicated today that it would grant the application of the Government Pharmaceutical Organization for a compulsory license to manufacture a generic version of the AIDS retroviral drug Efavirenz. (Thanks to the Consumer Project on Technology for the link.)
The reason: AIDS sufferers in Thailand are beginning to demonstrate resistance to the existing government-manufactured AIDS drug GPO-vir, but can't afford the high priced Efavirenz, marketed by Bristol-Myers Squibb under the name Sustiva. So in the interest of public health, Thailand plans to take advantage of the right granted to it by the World Trade Organization's TRIPs (Trade-Related Aspects of Intellectual Property) agreement to break Bristol's patent.
Bristol-Myers Squibb and the rest of Big Pharma would rather Thailand (or any other nation) did not exercise its TRIPs rights. They have thus lobbied long and hard for the U.S. to incorporate increased protections for their intellectual property that go above and beyond TRIPs in the bilateral free trade agreements that the U.S. has been industriously negotiating with other nations in recent years. Thailand, partially as a result of its status as a popular stop on the global sex tour circuit, has more than its share of AIDS sufferers, which may explain why Big Pharma's demands have been a major sticking point in a bilateral free trade agreement that the U.S. and Thailand have been negotiating since June 2004. Public health advocates (including the country representative in Thailand of the World Health Organization, who was later transferred after publicly criticizing the proposed FTA) have long argued that signing such an agreement would hurt the ability of Thailand to properly care for its citizens.
How, specifically, would this happen? If you look at other FTA agreements that the U.S. has recently concluded, notably with Australia and Singapore, there are three main ways that the U.S. attempts to restrict the ability of a nation to issue a compulsory license.
1) TRIPs allows any nation to declare a compulsory license without declaring a reason. The Singaporean and Australian agreements limit the use of such licenses to antitrust remedies, public non-commercial use, or national emergencies.
2) For a generic drug manufacturer to enter a given market with a particular drug, it must receive regulatory approval to market that drug. Recent bilateral FTAs negotiated by the U.S. require that the patent holder give consent for marketing approval.
3) In order to get marketing approval a generic manufacturer must also present test data proving its safety and effectiveness. Typically this is done by using the test data already amassed for the original patented drug. TRIPs forbids this only in cases of "unfair commercial use." Bilateral FTAs require varying periods of test data exclusivity, no matter what the circumstances.
Taken together, these provisions are carefully designed to hamper a country like Thailand from doing exactly what it announced it would do today.
Compulsory licenses, Big Pharma and TRIPs frequently pop up in the pages of How the World Works. But in the context of post-coup Thailand and the post-midterm-election United States, the topic takes on newly relevant dimensions. The ousted prime minister of Thailand, Thaksin Shinawatra, was widely seen as a gung-ho free trader who was pushing Thailand too far too fast in the direction specified by global corporate interests. Even before the coup, negotiations on the FTA had reached a standstill, a casualty of Thailand's ongoing political crisis. (Which makes the post-coup announcement by the U.S. that it would not resume negotations until a democratically elected government took power something of a face-saving gesture.)
In the United States, advocates of free trade -- even those who will concede that bilateral agreements are less desirable than comprehensive multilateral agreements worked out in the context of the WTO -- are distraught because they see the Democratic takeover of Congress as spelling doom for future FTAs. As they wring their hands and invoke the holy aegis of Ricardo, they have been wont to call Democrats "protectionist."
But a close look at what really goes in the bilateral FTA sausage factory makes the name-calling a little suspect. One way to look at these FTAs is to see them as devices by which the U.S. secures increased protection for pharmaceutical industry products in exchange for granting improved access to U.S. markets for manufactured and agricultural goods. This is hardly some kind of perfect world of "free trade" where tariffs and borders disappear and everyone lives happily ever after off of their comparative advantage.
Is it really protectionist for Democrats to say, let's reexamine this equation, and reevaluate the question of which sector of the U.S. economy should benefit from how trade agreements are negotiated? Should, for example, the pharmaceutical industry be gaining a global advantage at the expense of concessions that may make life for manufacturing workers in the U.S. more difficult? Isn't what the U.S. is doing protecting the pharmaceutical industry from competition?
Unfortunately, Democrats bashing globalization on the campaign trail rarely delve into the nitty-gritty details of FTA agreements in order to make a case for their opposition to how trade is currently practiced. If they did, and laid out carefully how the tradeoffs benefit some American industries while hurting others, while simultaneously having a negative impact on public health in the developing world, it might get a little more difficult to bash them as protectionist.