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A brief update on compulsory licensing and infectious diseases in ASEAN

Compulsory licensing has been a point of great dispute, with opinions torn between the rights of patent owners and accessibility to lifesaving, affordable drugs to the general public. The high cost of patent-protected pharmaceuticals and the inherent prevalence of infectious diseases such as HIV/AIDS, malaria and avian influenza are fueling demand for generic drugs and anti retrovirals. Most countries in Southeast Asia have adopted legislative mechanisms that afford provisions to facilitate compulsory licenses. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the subsequent Doha Declaration delineates requirements and circumstances under which these licenses may be granted for importation or local manufacture of patented inventions by third parties without the consent of the patent owner. Original patent owners are compensated based on the sales of the generic product. According to several existing guidelines such as the 1998 Japanese Patent Office guideline and UNDP Human Development Report of 2001, the remuneration rate ranges anywhere from 0-6%.


November 2003 saw, Malaysia setting the precedent in Southeast Asia by invoking Section 49 of its Patents Act (1983). Following issuance of a Government Use order, the Ministry of Domestic Trade and Consumer Affairs issued a 2-year license to India-based pharma manufacturer CIPLA, for the importation of three patent-protected HIV/AIDS anti retrovirals: Didanosine (Bristol-Myers Squibb), Zidovudine and Lamivudine+Zidovudine (GlaxoSmithKline). The culmination of this effort saw treatment costs per patient reduced dramatically by some 80%, allowing government health institutions to provide free treatment and increase patient capacity by more than 100%. The patent owners were offered a compensation of 4% based on the value of generic anti retrovirals delivered.


Almost a year later, neighboring country Indonesia became the next in line to issue a Government Use authorization in an effort to control HIV/AIDS. In line with Article 5 of Government Regulation No. 27 regarding the Mechanism of Patent Exploitation by the Indonesian Government, Presidential Decree no. 83 was issued in October 5th 2004. PT Kimia Farma was authorized by the Indonesian Government to manufacture generic copies of patent-protected anti retrovirals Nevirapine (Boehringer Ingelheim) and Lamivudine (GlaxoSmithKline) for the remaining patent protection terms of either drug, 7 and 8 years respectively. The Decree also stipulated a compensation rate of 0.5% of the net generic sales value to the patent owners. In the ensuing period, free and partially subsidized anti retroviral treatment for patients were made available from government hospitals.


Another Southeast Asian nation that has opted to employ compulsory licensing in order to combat HIV/AIDS is Thailand. The Thai government issued compulsory licenses for the generic production of HIV/AIDS drugs Efavirenz (Merck) in November 2006 under Section 51 of is Patents Act B.E. 2522 (as amended by the Thai Patent Act no.2 B.E. 2535 and no.3 B.E. 2542). The Thai Government Pharmaceutical Organization (GPO) was authorized to begin mass production of the drugs, which should commence some time in the middle of the year. Until local production is available, the generic drugs will be imported from India. The generic is expected to be able to reduce treatment costs by half. Merck will be compensated for the sale of generic Efavirenz at a remuneration rate of 0.5%. The licensing of another anti retroviral, Kaletra (Abbott Laboratories), earlier this year has sparked fierce debate that rocked not only the pharma industry but the world as well. The resulting dispute led to Abbott Laboratories’ decision to withdraw 7 new drug registrations in the country, including one for a new heat-stable formulation of Kaletra.

The Right Balance

Striking a balance between public health and intellectual property rights is a delicate task at best, in light of these recent events. Southeast Asia is setting the stage for the way the international community is going to perceive and decide between the rights, needs and concerns of all parties involved, though there is still a lot which remains to be seen.