The Frustrating Campaign to Stop Thai Drug Copying

When a patient suffering from an ulcer shows up at his doctor’s office in Thailand, chances are good that the physician, like doctors everywhere in the world, will prescribe the American drug Tagamet.

But something unusual happens when the patient arrives at the drugstore to buy the drug: He is offered the choice of Tagamet, at up to $1.50 a tablet, or one of 40 to 50 different, locally produced “copycat drugs” bearing such names as Ulcermet and Simadine and costing a fraction of the original.

While cimetidine, the chemical ingredient in Tagamet, is protected by patent in the United States and other developed countries, Thailand has no laws that prevent Tagamet or any other drugs from being copied.

Ian Boulton, general manager of Smith Kline & French (Thailand) Ltd., the local subsidiary of the American drug maker, estimates that his company has lost four-fifths of the market for ulcer drugs to copycat manufacturers because of the absence of Thai patent protection legislation. One survey suggested that the U.S. pharmaceutical industry as a whole loses $30 million to $40 million a year in Thailand.

Patents on medicine are just one of the many complicated issues at the so-called Uruguay round of negotiations for the General Agreement on Tariffs and Trade, or GATT. The talks are scheduled to enter their windup phase in Brussels this week.

The Thai government has signed the Trade in Intellectual Property (TRIP) agreement, part of the GATT labyrinth. It protects such items as drug patents and computer software. The agreement will oblige the Thais to enact patent legislation protecting drugs by a deadline to be determined.

But the success of the overall GATT negotiations hinges on such wider issues as agricultural subsidies and textile exports. If the talks collapse without agreement, Thailand will not be required to act on the patent issue.

The question of intellectual property rights has been a sore point between Thailand and the United States for several years because Thailand is infamous as a source of counterfeit goods ranging from fake watches to pirated audiotapes and videotapes selling for as little as $1 each.

Three U.S. industry groups have recently filed a trade complaint calling for retaliatory steps to force Thailand to protect American copyrights. Jack Valenti, chairman of the Motion Picture Export Assn. of America, called the country “the worst offender of intellectual property rights in Asia.”

While Thailand has a copyright law that authorities could use to control pirating of music and films, the drug issue is far more emotional here.

Thailand’s drug industry has lobbied effectively against patent legislation, arguing that, because Thailand is so poor, it is unfair to make consumers pay high Western prices when local drug equivalents are cheaper.

The debate has many of the elements of the generic drug argument in the United States, with the added dimension of a local industry seeking shelter from outside competition.

“You have to weigh the social gains against the benefits to the private companies,” said Preeya Sibunruang, president of the Thai Pharmaceutical Manufacturers Assn. “There should be a lot of competition to bring prices down for the poor consumer. Western drugs are frequently between 50% and 300% more expensive than the local equivalents.”

According to data supplied by the Thai group, there are 20 foreign-owned drug manufacturers in Thailand and 111 local manufacturers, which produce drugs without license.

Dr. Vaivudhi Thanesvorakul, a chemical producer, uses a diarrhea drug as an example of the steep price differences between Western and locally produced treatments. He said a Western manufacturer of a patented drug for diarrhea, a common problem in rural areas, was charging 30 times the price of local manufacturers. (Even the most potent drugs are sold without prescription in Thailand, and pharmacists in rural areas often substitute for doctors.)

Western drug manufacturers reject the price argument. They say that when patent legislation is adopted, it will affect only new drugs coming on the market, leaving plenty of competition.

Dirk Naumann, president of the Pharmaceutical Producers Assn., a Western drug lobby, said Western drug prices are already substantially cheaper in Thailand than in the United States or Western Europe.

“The question is, does mankind want continuing medical research?” Naumann said. “Americans pay more than Thais pay for drug prices. We’re financing the research of tomorrow.”

A new generation of antibiotics called quinolones was developed in Japan and the United States in recent years. The drugs are so new that the U.S. Food and Drug Administration has not yet approved them for sale, yet copies are already on the market in Bangkok.

In addition, Western manufacturers have raised the possibility that local copycat drugs will not have the same quality or effectiveness as the originals, although Thailand does have a food and drug agency that is supposed to monitor drug purity.

Most of the local manufacturers obtain the ingredients for their products from China, South Korea or factories in Eastern Europe, where standards are not always up to Western levels.

Another factor is that Western companies have begun to withhold new drugs from the Thai market, because registration with the Thai government requires them to disclose manufacturing details that could help copycat producers duplicate the process. The result may be fewer new drugs reaching the market.

Still, an ethical dilemma exists in poor countries, such as Thailand, Argentina, India and other places where medicines are not protected by patents.

What happens, for example, when researchers finally find an immunization against the AIDS virus or a cure for cancer--and companies price it beyond the reach of the poor?

For the moment, the answer lies in the obscure GATT negotiations.