Earlier this month, 50 Democratic congressmen unexpectedly bucked their House leadership and harshly criticized the Thai government’s repeated violation of U.S. drug patents through compulsory licensing. “We believe that strong intellectual property protections are critical…to ensure that investments continue to be made…in all areas of scientific discovery that serve to improve our lives,” the congressmen, led by Adam Smith (D-WA) and Ron Kind (D-WI), wrote in a July 31 letter to U.S. Trade Representative (USTR) Susan Schwab. The U.S. government must “continue to stress that such licenses not be issued lightly,” the congressmen urged Schwab. 

Although some of their arguments are worryingly protectionist, their main point is well taken: Bangkok’s decision to import copies of several U.S. drugs—including the Bristol Myers Squibb/Sanofi-Aventis heart disease drug Plavix, the Sanofi-Aventis breast cancer drug Taxotere, and the Abbott HIV drug Kaletra—threatens incentives for drug innovation. There is overwhelming evidence that patent protection encourages research and development, which spurs innovation, leading to new and better drugs. Although most pharmaceutical company profits come from sales in the developed world—and not from poor or even middle-income countries like Thailand—patent breaking sets a bad precedent. After all, if it can be excused or justified in the case of heart disease drugs in Thailand, why not in the case of diabetes drugs in Europe? 

The Thai government insists it cannot afford these drugs, and it has attracted some prominent advocates in the House. In a letter to Schwab dated July 26, House Ways and Means Chairman Charlie Rangel (D-NY) and trade panel chief Sander Levin (D-MI) defended Thailand, urging the creation of a new advisory committee for USTR to ensure better “balance between encouraging pharmaceutical innovation and providing access to medicines in developing countries.” 

U.S. lawmakers should urge Bangkok to import high-quality drugs within a legal framework that respects IP rights and allows for only rare instances of patent breaking.

Rangel and Levin imply that Thailand’s compulsory licenses will enable it to either produce or purchase larger quantities of cheaper, effective drugs. But the drug copies produced by the Thai government have been of poor quality; even the United Nations-backed Global Fund, which has actively encouraged local production of drugs, withdrew funding from Thai drug production last year because of poor standards.

The quality of the drugs that Thailand imports (and intends to import) from India must be scrutinized as well. In 2006, the U.S. Food and Drug Administration identified a lack of quality control procedures at Ranbaxy, India’s biggest drug producer. The FDA is currently investigating whether the company produced and sold adulterated drugs. Thailand has imported a large quantity of Ranbaxy’s generic HIV drugs, including 66,000 bottles of efavirenz in 2007. 

The key issue for U.S. lawmakers is whether Thailand is breaching international norms of conduct. Bangkok says it is in compliance with the World Trade Organization’s Agreement on the Trade Related Aspects of Intellectual Property (TRIPS), which allows governments to break a patent after “efforts to obtain authorization from the right holder on reasonable commercial terms and conditions” have failed, and in cases of “national emergency,” “other circumstances of extreme urgency,” or “public non-commercial use.” 

But what, exactly, constitutes “meaningful consultation” or a “national emergency”? Most experts—from World Health Organization Director-General Margaret Chan to USTR Schwab—acknowledge that the determination rests with national governments. The congressmen who signed the Smith-Kind letter said they “do not believe that WTO members intended [TRIPS] to be used…without meaningful prior consultation with patent holders,” but they stopped short of accusing Thailand of noncompliance. 

Thailand has acted within its rights, albeit with potentially dangerous consequences for its citizens and its future economic development. Indeed, the U.S.-Thailand Free Trade Agreement has stalled over intellectual property (IP) concerns. U.S. lawmakers should urge Bangkok to import high-quality drugs within a legal framework that respects IP rights and allows for only rare instances of patent breaking under TRIPS. That is the best way to boost drug access without compromising innovation.

Roger Bate is a resident fellow at the American Enterprise Institute. Karen Porter is a research assistant at the American Enterprise Institute and an editorial assistant at THE AMERICAN.

Image by The Bergman Group/ Dianna Ingram.