PRIORITY WATCH COUNTRY
Intellectual Property Protection
Certain aspects of the existing Thai Patent Law (1992) should be removed with the passage of the pending legislation which is due to be implemented in the near future. The most important change will be the elimination of the Pharmaceutical Patents Review Board and associated compulsory licensing provisions based on pricing.
However, there are still many features of the Thai Patent Law which will not be changed in the pending legislation:
Patentable subject matter - Section 9(1) still excludes naturally existing biologicals which is not in compliance with the requirements of TRIPS.
The Bolar type provision which allows generic use of patentable subject material for testing prior to patent expiry of the originator's product, (Section 36(2)(5)) is still the part of the proposed patent law.
Compulsory licensing if the patented product is not produced in Thailand is still incorporated in Section 46. However, the Royal Thai Government will now recognize importation as working the patent.
Dependent compulsory licenses, compensation and appeals are all still inconsistent with TRIPS.
In addition the draft Thai law introduces new inconsistencies:
- Section 6(4) extends the state of the art period to "an invention of which more than eighteen months prior to the date of (application) an (application) in a foreign country has been filed and not been granted. The internationally accepted period is 12 months. This may be used as a mechanism to reject an application by a foreign applicant on the basis that his country does not offer the same rights to Thai applicants in the foreign country.
Section 36(2)(4) allows import of the patented product or product produced by the patented process which has been rightfully acquired, into the Kingdom for sales by any person, if the patentee or the licensee has already sold the product or product produced by the patented process in the Kingdom. This is the principle of "national exhaustion" as opposed to "international exhaustion." This denies the sole rights to the patent holder and would allow importation of products from countries that have not recognized patent rights for the product or process. However, if the patent holder does not license his product, the patent holder can still control his intellectual property rights.
The current interpretation of the Thai Department of Intellectual Property of Section 39 of the 1992 law is directly opposite to the agreed intent of the law before the law was enacted. The focus is to prevent pending applications from having product claims inserted - as was intended. This calls into question the sincerity of the RTG in providing Intellectual Property Protection.
Draft Trade Secrets Law: Thailand is preparing a new trade secrets law to comply with TRIPS. Unfortunately, Section 11(4) attempts to exclude disclosure of trade secrets by a government agency to protect any "public interest" not having commercial objectives. This is intended to allow the use of registration data for generic regulatory filings.
Parallel Imports: The Thai pharmaceutical market suffers a relatively high level of parallel imports from other parts of Asia, yet neither the Thai FDA nor other authorities has moved to rectify this situation, despite the dangers that such imports pose to national health. There is recent evidence the Thai FDA is being slightly more diligent in enforcing restrictions on parallel imports.
Drug and raw material imports are subject to duty which currently ranges from 10% to 30%. The duty rate for drugs where a generic equivalent is not manufactured in Thailand is normally 10%. The duty rate for imported finished goods that compete with locally manufactured product is 20% to 30%.
In a communication from the Thai Ministry of Public Health (MOPH) to the U.S. Embassy in Bangkok in 1998, the MOPH made clear that it was not intended that foreign pharmaceutical companies be eliminated from the Government Hospital procurement policy. The "Buy Thai" policy which PhRMA cited in its NTER submission in November 1998, is therefore no longer official. In summary, there are still some restrictions on access, but the "Buy Thai" policy is not in effect as it was originally stated.
Restrictive Drug Lists
While there is no "official" "Buy Thai" policy, it is clear, that with the formulation of the new National List of Essential Drugs (NLED), there will be significant limitations on hospitals purchasing power. The new NLED is now restricted to 650 drug items and subject to the median price policy. The median price is established by surveying the purchases for a drug form/strength and setting the price at the median for all the purchases surveyed. This favors local generic producers and pays no heed to quality and Good Manufacturing Practices (GMP) or contribution to product research and development.
In 1998, the Thai Ministry of Public Health (MOPH) established a Subcommittee to review and revise the existing National List of Essential Drugs (NLED). The original list has been in place for several years and was an adaptation of the WHO 'essential drug list' (designed as a minimal list of drugs that should be available to satisfy basic health care needs in developing countries.) The WHO list maintains some 250 compounds. Thailand expanded its list to about 450 compounds in 1998, but applied a restrictive pricing scheme to limit reimbursement. Because of the severe price restrictions, companies avoided applying for listing on the National List and sought listing on individual hospital formularies since there were no restrictions on having their products prescribed and reimbursed within the hospital system.
In late 1998, the Thai MOPH indicated that the NLED will become a maximum list for government hospitals and that products with "provisional registration" subject to a "Safety Monitoring Protocol" (SMP) (i.e., Thailand's form of pipeline protection) would be excluded from the list.
The intention of the 1994 Thai FDA Rules on 'Transitory Provision to Conduct Safety Monitoring and Bioequivalence Study of New Drug', to provide pipeline protection for pharmaceutical products patented elsewhere in the world between 1 January 1986 and 30 September 1991 is clearly stated. The procedure required companies to report adverse reactions for a two year period. If requested by the company this could be rolled over for a further "two plus one" year reporting periods during which time the FDA would not accept a registration file for a generic copy. The rules provided up to five years market exclusivity; the only restriction being that sales were restricted to hospitals and clinics (i.e., no drugstore sales).
To gain access to the NLED, PhRMA member company affiliates will have to provide data to show that new drugs are safe for use in the Thai population, so that the rules of the Safety Monitoring Protocol (SMP) need not apply. Drugs will not be listed on the NLED if they are subject to a SMP. The research-based pharmaceutical industry hopes that data from other Asian countries will suffice to meet this requirement to demonstrate safety outside of the SMP.
If so, the research-based industry in Thailand should be able to cut the length of the SMP to a few months, gain access to the NLED and be able to sell to drugstores (which sales were embargoed under the SMP). The Thai FDA Secretary General has promised that, even with the completion of an SMP or demonstration of safety in Thai patients, the research-based industry will still have four years of protection from generics and additional time during which the generic registration file is reviewed.
The treatment of the NLED as a maximum list and the exclusion of the opportunity to have SMP drugs included in the list, however, effectively negates the original intent of the provisions to provide pipeline protection and market exclusivity for new products in Thailand. Innovative products qualifying for the SMP will not be listed or stocked in most hospitals.
PhRMA believes that the Thai Government's removal of the opportunity to market new products through government hospitals is tantamount to setting up a market access barrier to the introduction of new products in Thailand.
Standards, Testing and Labeling Requirements
A new chemical entity can be registered in Thailand, but the filing will not be accepted unless a Certificate of Free Sale (FSC) from the country of origin is supplied. Samples of the new drug must be submitted to the Thai Department of Medical Science for analysis prior to acceptance of registration filings. This analysis usually takes 6 months. Once the file is received, the FDA can take up to 18 months ensuring that it is complete, to its satisfaction, before submitting the clinical work to the Review Committee for consideration. The Committee may ask additional questions or require that a local study be carried out to ensure that the clinical data can be duplicated in Thailand by Thai national companies under local conditions.
The Thai FDA has implemented "user fees" to quicken the registration process and this policy has improved registration timing. However, these user fees are being politically challenged and may be eliminated in the near future. If this occurs, registration timing may fall back to the old two year filing term.
The Ministry of Public Health has eliminated the requirement for sample analysis before filing of registration dossiers. The Ministry still requires an FSC to allow filings for imported products. An FSC is not required for regulatory filings where the product is to be based upon local production. PhRMA believes this is in contravention of WTO principles of national treatment.
Government Pharmaceutical Organization
This organization is exempted from registration and Good Manufacturing Practice requirements and has rights to an exclusive position in supplying government hospitals with products on the National List of Essential Drugs. PhRMA believes this also is in contravention of WTO principles regarding national treatment.
Potential Exports/Foreign Sales
From Thai-based sales data and from estimates based on the size and buying power of the Thai population, PhRMA estimates that the potential market for its companies could be US$70 million, if the aforementioned barriers were removed.
For all the aforementioned reasons, PhRMA believes that Thailand should be listed as a Priority Watch Country under Special 301 in 1999.