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close this bookStudy of the implications of the WTO TRIPS Agreement fotr the pharmaceutical industry in Thailand (The Centre for Health Economics, Faculty of Economics, Chulalongkorn University Bangkok - WHO Collaborating Centre for Health Economics - WHO/SEARO, 1999, 113 p.)
View the document(introductory text...)
View the documentAcknowledgements
View the documentExecutive Summary
Open this folder and view contents1. Introduction
Open this folder and view contents2. Overview of the Pharmaceutical Industry
Open this folder and view contents3. Health Care Facilities
View the document4. Drug Market Situation
Open this folder and view contents5. Effects of the TRIPS Agreement on the Domestic Pharmaceutical Industry
View the document6. Conclusion
View the document7. Recommendations: 11 Ps Strategies
View the document8. Suggestions for Further Study
View the documentReferences

Executive Summary

In 1947 twenty-three nations signed a treaty known as GATT or General Agreement on Tariffs and Trade. The primary objective of this treaty was to promote and regulate the liberalization of international trade through "rounds of trade negotiations" The eighth of these rounds, known as the Uruguay Round of Multilateral Trade Negotiations, produced the Marrakesh Agreements which established the World Trade Organization (WTO). Since 1994, attention has focussed on WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as the most far reaching international instrument ever negotiated on intellectual property rights. Under TRIPS, the freedom of each country to determine it's national patent laws in accordance with it's own objectives and interests no longer exists. The TRIPS Agreement requires universal patent protection for any invention in any field of technology. This essentially targets pharmaceuticals, which many countries had previously excluded from patent protection. All WTO members must amend their patent legislation within a limited time or transition period. And if any nation fails to comply with the rules of this system, it may incur WTO trade sanctions.

Many studies of the TRIPS Agreement indicate that the globally uniform high standards of the TRIPS patent system will have a great impact on the health sector and may negatively affect national drug production, drug prices, availability of essential medicines and pharmaceutical technology and numerous other factors in the developing and least developed countries. In addition, there could be a greater concentration of drug production in industrial nations rather than a transfer of technology to or foreign investment in developing countries.

The potential effects of the TRIPS provisions on pharmaceuticals in Thailand are the limited term of product and process patents, conditions of protection, broad scope for compulsory licensing and enforcement procedures in the national patent system. This study of implications for the Thai pharmaceutical industry discovered that there has not been much technology transfer or foreign investment in the local drug industry since 1992; spending is mainly for curative care; originator pharmaceutical firms did better than generic firms after 1989; the affect of the economic crisis on the cost of imported drugs has forced the government to more strictly control spending; the share of the original drug market has increased to 67 % of the 1997 total (with generic drugs at 33%); and the gap of equivalent prices between original and generic products is varied and unpredictable. It was also found that there is no systematic evaluation of the effectiveness of government price regulation and how drug prices affect affordability; that public sector procurement rules and collective procurement are effective in price bargaining, but due to a lack of overall coordination, drug companies are charging different prices for the same product procured by different Thai purchasers.

Given the fact that Thailand is a member of the World Trade Organization, it has to abide by the mandates set forth in the TRIPS Agreement. To alleviate the potential negative impact resulting from such compliance, an Eleven Ps Strategies is being proposed. The strategies include an innovative purchaser strategy, a prescriber and dispenser strategy, a producer strategy, a product strategy, an effective price control system, a patent - to - third party strategy, parallel imports, a power -of- the -customer strategy, R&D, personnel strategy, and prevention strategy. Primary care and preventive medicine should be the keystone of national health policy. Preventive measures and healthy life styles will eventually help relieve the demand for medical care and certainly bring a better quality of life in a more cost-effective fashion.

In conclusion, this analysis of the implications of the TRIPS Agreement for the pharmaceutical industry in Thailand and consequent recommendations is just the beginning point for a continuous process. With ongoing change in the structure of the economy, regulations, patent laws and myriad other factors, further study and action will be necessary. Above all, government attention is extremely important to ensure progressive development. The pharmaceutical industry has not received enough consideration. National authorities should have a clear vision for this industry and understand the repercussions to national health in the future if nothing is done. Lessons learned from peer countries and continuing study will provide answers for solutions suitable to Thailand's conditions. The provision and revision of pharmaceutical policies should not merely be in accord with existing general industry standards and international commitments, but should ensure improvement in the quality of life for the Thai people as a whole.