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PMA CHARGES THAILAND WITH UNFAIR TRADE, REQUESTS INVESTIGATION

Executive Summary

PMA CHARGES THAILAND WITH UNFAIR TRADE, REQUESTS INVESTIGATION by the U.S. Trade Representative into the Far East nation's patent policies. In a Jan. 30 petition filed under Section 301 of the Trade Act, the Pharmaceutical Manufacturers Association protested Thailand's refusal to provide product patent protection for pharmaceuticals. The petition also urges U.S. Trade Representative (USTR) Carla Hills to initiate "an investigation under Section 302" of the Trade Act into Thailand's patent policies. PMA called the Thai government "one of the most egregious offenders" among the "many foreign governments which currently do not afford adequate and effective protection" for pharmaceutical product and process patents. Thai law provides process patent protection for 15 years exclusivity, but it is "substantially flawed" in that it contains "overly broad compulsory licensing provisions," the petition asserts. For example, the law requires patent holders to "work" their inventions in Thailand "to avoid compulsory licensing or patent cancellation." Thailand enacted its patent legislation in 1979 and excluded protection for drug products, the association said in a press statement. PMA noted that 20 member companies have controlled affiliates in Thailand with 1989 sales of "about $ 61 mil." accounting for "approximately 19% of the total Thai pharmaceutical market." Because of its patent policies, PMA in 1987 asked the USTR to remove Thailand from the list of preferred trading partners, and the nation lost duty-free benefits "on approximately $ 165 mil." in Thai imports. House Energy & Commerce Committee Chairman Dingell (D-Mich.), in a Feb. 5 letter to Carla Hills, asked the USTR to examine the PMA petition "carefully and carry out the law, regardless of the views of [General Agreement on Tariff and Trade] panels and others that the U.S. is not entitled to retaliate against foreign government sanctioned piracy." Dingell maintained that U.S. negotiators can "convince the Thai government that U.S. pharmaceutical product and process patents must be protected against piracy" only if they "are armed with a credible threat of meaningful retaliation." The congressman's Oversight Subcommittee will review the Bush Administration's trade policy, he told Hills. "I anticipate that after the subcommittee is organized for the 102nd Congress and your 1991 National Trade Estimate Report is published, the subcommittee will renew its inquiry into the adequacy of Administration efforts to assure that all our trading partners provide market access and intellectual property protection equivalent to that which foreign firms enjoy in the U.S." Citing a 1986 investigative report by his Oversight Subcommittee, Dingell contended that pharmaceutical patent piracy by Thailand constitutes not only an economic threat but also a health threat overseas and in the U.S. The report quoted a "major American drug manufacturer with operations in Thailand" that said generic copies of patented U.S. pharmaceuticals are "available from Thai manufacturers in as little as two weeks" after products are introduced there. Although the appearance of the copies are nearly identical to the patented products, "laboratory tests performed by the American company" demonstrate that "the potency of the copies varies widely." Furthermore, the report continues, "there could be an impact on American consumers" if "Thai generics of uneven quality are exported to other countries in the region." Noting that counterfeits of the SmithKline Beecham ulcer drug Tagamet were found in Hong Kong, the report states it would have been "a simple matter to repackage [such counterfeits] so that they appear to be a product of the U.S. and sell them into the diversion market in this country."
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