Malaysia: 'Government use' route to importing generic medicines In 2003, Malaysia became the first Asian country to issue

a compulsory licence following the adoption of the Doha Declaration on the TRI ! Agreement and ublic "ealth by the 200# Ministerial $onference of the %orld Trade &rganisation '%T&() Chee Yoke Ling "I*" prices of antiretro+iral medicines 'AR,s( for "I,-AID! treatment and a series of unsuccessful attempts since 200# to get sufficient price reductions from two patent.holding pharmaceutical companies '*la/o!mith0line '*!0( and 1ristol.Myers !2uibb '1M!(( led the Malaysian Ministry of "ealth 'M&"( to mo+e for a compulsory licence to import cheaper generic +ersions from India) &f the eight AR,s in the Malaysian M&" Drug 3ist, three are not patented) "owe+er, all were +ery e/pensi+e as there were no generic AR,s manufactured locally or imported) 4egotiations with drug companies to effecti+ely bring down prices were not satisfactory5 the reductions were still inade2uate, and prices remained too high) The atent Act #673 pro+ides for compulsory licences 'with a simple standard format pro+ided in the Act( and the 8Rights of *o+ernment8, the term for 8go+ernment use8 in the Malaysian law) There is no prescribed form re2uired for 8go+ernment use8 and so a decision of the go+ernment is sufficient) In 4o+ember 2002, gi+en the lac9 of successful negotiations with drug companies, and boosted by the Doha Declaration on the TRI ! Agreement and ublic "ealth, the M&" obtained $abinet appro+al to import generic AR, drugs) The drugs concerned are patented in Malaysia) In :anuary 2003, the M&" began price negotiations with the Indian company $ipla, and applied for an authorisation from the Ministry of Domestic Trade and $onsumer Affairs which is responsible for intellectual property) At this point, the opposition began) Resisting pressures *!0 in ;ebruary 2003 offered to drop the price of combi+ir 'a combination of <ido+udine and lami+udine( by =>? after the $abinet decision to purchase drugs from India) In March, some other go+ernment agencies as9ed the M&" to reconsider its mo+e, citing concerns that such an action would deter foreign in+estors) At the same time, *!0 met with the then Minister of "ealth) The M&" decided to proceed first with the import of three non.patented AR,s) This was because these medicines were priced too high in Malaysia e+en though they were not patented in the country, and negotiations to effecti+ely reduce the prices failed) Thus in May, the M&" issued contracts for sta+udine '@!A=)=B per C0 tablets(, ritona+ir '@!A60)2# per #20 tablets( and ne+irapine '@!A2#)6# per C0 tablets( to be imported from India) In August 2003 the Ministry of Domestic Trade and $onsumer Affairs again suggested that the M&" not use compulsory licensing) The M&", howe+er, stood firm on the imports under the 8go+ernment use8 pro+isions and the $abinet decision was reaffirmed) The authorisation for a period of two years beginning # 4o+ember 2003 was finally obtained from the Ministry of Domestic Trade and $onsumer Affairs for the import of <ido+udine 'patented by *!0(, didanosine-ddI 'patented by 1M!( and a combination of <ido+udine and lami+udine 'patented by *!0() The 2uantity to be imported and other conditions were specified by the M&") The Minister of "ealth announced in 4o+ember 2003 that "ighly Acti+e Antiretro+iral Treatment '"AART( would be free once the import of generics started)

The patent holders lodged complaints against the Malaysian go+ernment8s mo+e after the issuance of the 8go+ernment use8 authorisation) They used the threat of reduced foreign in+estment in the country, and one of them also e/pressed concerns that Malaysia8s action would create a precedent internationally) At the same time, there was wide national media co+erage on the a+ailability of cheaper AR,s, a mo+e that gained public support) In ;ebruary 200B, the M&" contracted a local Malaysian company to import generic <ido+udine, didanosine and a combination of <ido+udine and lami+udine from $ipla) The a+erage cost of M&" treatment per month per patient dropped from @!A3#= to @!A=7, e2ui+alent to about an 7#? reduction, when generic drugs were used) The number of patients who could be treated in go+ernment hospitals and clinics increased from #,=00 to B,000) The M&" target was #0,000 when there is more awareness of the AR,s8 a+ailability and more outreach by the public health system to needy patients) As a result of the 8go+ernment use8 order, the patent holders also dropped their own prices due to competition from the generic imports) The reductions in cost of the AR,s used for first.line treatment in Malaysia are e/emplified by the case of the triple therapy regimen of sta+udine, didanosine and ne+irapine, and a regimen of the combination of <ido+udine and lami+udine plus efa+iren<) Although sta+udine and ne+irapine are not patented in Malaysia, the prices of these AR,s mar9eted by the companies concerned were also high) *eneric +ersions were freely imported from India since May 2003) "ence there was an 73? drop in price for the regimen of sta+udine, didanosine and ne+irapine between 200# and 200B with the use of generic +ersions of the three AR,s) Dfa+iren< is patented in Malaysia and this AR, was not included in the 8go+ernment use8 order) This is why the cost reduction between 200# and 200B for the regimen of <ido+udine, lami+udine and efa+iren< was only C7?, and the final amount is still considerable) 'Adequate remuneration' Ta9ing into account e/isting state practices and the recommendation of the @nited 4ations De+elopment rogramme8s '@4D ( "uman De+elopment Report 200#, the M&" proposed to the patent holders a remuneration le+el of B? of the +alue of stoc9s actually deli+ered) "owe+er, according to M&" officials, the patent holders 8show no interest in claiming compensation8) This was probably because they did not want to signal any acceptance of the use of compulsory licences or any particular rate of payment, which would set an undesirable precedent from the industry8s +iewpoint) The Malaysian go+ernment also has a policy of encouraging domestic manufacture of non. patented medicines) In 2003 sta+udine and ne+irapine, which are not patented in Malaysia, were registered for local production in order to increase access to those drugs) A local company negotiated a +oluntary licence to use lami+udine 'patented by *!0( to manufacture a three.in.one fi/ed.dose AR, combination 'sta+udine E lami+udine E ne+irapine() 4egotiations ha+e been completed on the royalty payment of @!A0)0B2 per tablet, i)e) C)0? of the price per tablet) "owe+er, since only one of the three components is patented, assuming that there are e2ual proportions of each component, the actual royalty is #7? per tablet) This is +ery high, especially when compared to the a+erage remuneration rate of B? for compulsory licensing that the M&" had offered the same patent holder in relation to the imports of generic AR,s from India) 'After the Malaysian 8go+ernment use8 import of generic AR,s, Indonesia in 200B and Thailand in 4o+ember 200C authorised local production of selected AR,s under 8go+ernment use8 orders and both go+ernments decided on 0)=? of the sales price of the products as the remuneration rate . see accompanying co+er.story articles in this issue)(

A second restriction under the +oluntary licence is that the fi/ed.dose combination can only be distributed in go+ernment hospitals and clinics) All these conditions are not publicly 9nown, as in the case of most +oluntary licencing arrangements) Meanwhile, according to the M&", patent holders are more cooperati+e now compared to the earlier period of failed negotiations and subse2uent e/ercise of go+ernment use) It appears that the compulsory licensing option will not be used for the time being and the ad+antage gained from the 8go+ernment use8 order will be used instead for negotiating lower prices of the patented drugs) "owe+er, the limits to price negotiations and +oluntary licensing as e/perienced in Malaysia 'and other de+eloping countries( emphasise the need for de+eloping countries to use compulsory licences, including 8go+ernment use8, to ensure access to affordable medicines) As the issue of access to affordable AR,s gains momentum, the community of people li+ing with "I,-AID! in Malaysia ha+e also begun to organise themsel+es to promote their rights) In late 200=, the ositi+e Malaysian Treatment Access and Ad+ocacy *roup 'MTAA*E( was officially registered) %ith the end of the 8go+ernment use8 authorisation, this group is now lobbying for continuing use of the fle/ibilities enshrined in the TRI ! Agreement) The Malaysian e/perience illustrates that when health officials and ministers are informed of the rights and fle/ibilities under the TRI ! Agreement, and national patent laws are designed appropriately, access to affordable drugs can become a reality) This is despite the pressures from the patent holders and e+en misgi+ings from other go+ernment agencies in the country)