Possible Impact of Market Exclusivity Extension on

Pharmaceuticals in Thailand

Chutima AkaleephanInternational Health Policy Program,

Thailand

27 August 2005

IPR related Thai legal structures

Thailand has amended its Patent Act to conform with the main points of TRIPs since 1992, eight years before the 2000 deadline in WTO agreement

Thai Patent Act and Trade Secret Act conform with all TRIPs’ requirements

However, the Patent Act still does not cover cross country CL of the Doha Declaration

US FTA with others countries: issues related to pharmaceuticals

Data exclusivity Linkage between market registration and patentPatent term compensation due to delay of patent

approvalPatent term compensation due to delay of market

authorization processIntellectual property law enforcementRestriction on CL to only the case of government

useLimitation or cancellation of parallel import Limitation on patent cancellation

Proportion of Drug in Health Expense, 1996-2000 ($US million)

Source: Thailand Health Profile 2001-2004

2,456

4,882 drug expenditure

others

33.5%

Health expenditure = 7,338

Drug expenditure (retail price)

Possible impact of FTA on domestic manufacturers Main features of the local industries

Mainly conventional dosage form Limited capacity for production of raw materialsLimited capacity on bioavailability studies

Potential benefits of FTA: improve standard and quality increase export opportunities (AFTA, BIMST-EC) opportunity for cheaper raw material

Negative impact of FTA: reduce government’s revenueDisappear or being taken over longer period of expensive innovative drugs

Market authorization, market exclusivityand

implication of its extension

Sample selection

The 2002 imported drugs Total value ~ 500 million USD

1,136 generic names

First 49.9%74 generic names

Patent search

Generic drugs availability

42 items

Non-patented but monopoly14 items

Patented drug

18 items

Average months for Market Authorization, 1983-2003

0.0

5.0

10.0

15.0

20.0

25.0

30.0

year

no. of month

imported original local original imported generic local generic

Market exclusivity (14 Patented drugs)

Type of invention Patent filing to market

authorization (years)

Market exclusivity

(years)

Drug substance (n=3) 6.6 [4.9-9.1] 13.4 [10.9-15.1]

Process of intermediate /polymorph /crystalline form (n=4)

1.5 [1.2-2.9] 18.5 [17.1-18.8]

Formula (n=7) 1.2 [0.2-2.9] 18.8 [17.1-19.8]

2003 Current cost saving of 42 generic drug substitution ($US million)

DrugsTotal

expenditure

Expense on

innovative

Expense on generic - local manufacturing

Expense on

generic-import

Expected expense

without GS

Cost saving

42 items

252.8 166.5 42.4 43.8 517.0 264.3

Per item

6.0 4.0 1.0 1.0 12.3 6.3

Forecasted additional expense for minimum implications from three years market exclusivity extension ($US million)

year 1 2 3 4 5 10 Cumulative

Per item 0.1 0.5 0.5 0.7 0.8 4.5 13.9

New drug 60 items in 1st year

6.4 27.7 30.6        

New drug 60 items in 2nd year

  6.4 27.7 30.6      

New drug 60 items in 3rd year

    6.4 27.7 30.6    

…4th year       6.4 27.7    

…5th year         6.4    

…6th year              

…7th year              

…8th year           30.6  

…9th year           27.7  

…10th year           6.4  

Total 6.4 34.2 64.8 64.8 64.8 64.8 558.9

Forecasted additional expense from ME extension (million USD)

Years of extension

Additional expense per item

Additional expense of 60 items (1 year)

min max min max

1 0.1 1.1 6.4 65.9

2 0.6 2.5 34.2 152.4

3 1.1 4.7 64.8 279.2

4 1.7 7.2 103.9 431.0

5 2.5 12.0 151.7 722.5

6 3.4 19.2 204.5 1151.9

7 4.5 29.3 272.3 1755.9

8 6.7 43.2 403.3 2593.9

9 9.4 62.3 565.0 3737.2

10 13.9 90.2 836.7 5411.4

Recommendation for alternative negotiation positions for Thai-US FTA

Main position: zero negative public health implication

Rationales: Current patent system has already allowed

13.4 to 18.8 year of market exclusivity- very long.

Additional public burden from market exclusivity is very high (may double health expense)

Accept TRIPS plus means amendment of related laws which also benefit all other trade partners

Alternative position: least public health implications

No or shortest market exclusivity extension Case by case basis on compensation for delayed patent

registration and market authorization Compulsory licensing in such condition as national

emergency and extreme emergency must be retained Prevention of abuse in the implementation of linkage

between drug registration and patent

Measures to alleviate the possible future negative implication

Improvement of the patent registration process and database close coordination between Department of IP and FDA reevaluation of patent of new use of drug closely monitor potential evergreening patent with heavy penalty easy search of IP database expert in pharmaceutical and/or chemistry could play important

role in examination of patent application

Support more R&D capacity of domestic manufactures

Promotion of rational drug use and generic substitution

Support further improvement of GMP to international qualification

Thank you

for your attention