Obsession with lower cost leads to deadly mistake

Thailand's Aids policy threatens patients and health budgets

By BIBEK DEBROY

Thailand is putting HIV/Aids patients at risk with its drug policy again. The government produced one drug so badly that it increased resistance and pushed up the number of people needing ''second-line'' therapy, so now it has threatened to copy an effective but expensive second-line drug.

The manufacturer of the targetted drug, Efavirenz (sold as Stocrin), has now cut the price sharply, which sounds deceptively like good news.

But as pressures grow on the companies that invested vast amounts of time and skill in developing drugs, they seem increasingly reluctant to devote more energy to innovation if they risk not getting their investment back.

The Thai government should note that if at first you don't succeed, you have to ask yourself why you failed and then make a reasoned decision about what really will work.

There are, by the most recent estimates, currently about 50,000 Thais needing anti-retroviral treatment. To address the drastic problem, spurred on by activists, the government ordered the Governmental Pharmaceutical Organisation (GPO) to copy some anti-retrovirals and produce its own mix, GPOvir, on the grounds that other treatments offered by private sector companies were more expensive: therefore the Aids budget would treat many more patients. With noble intentions, this decision had drastic consequences.

For all the talk of increasing treatment, GPOvir never passed the important pre-qualification standards set by the World Health Organisation.

Undeterred by this serious warning, the government (and activist groups like Medecins Sans Frontieres in Cambodia and Laos) continued distributing this drug of indeterminate quality, pushing therapies of high quality out of the market.

Unsurprisingly, and as early as July 2005 during the 10th National Aids Seminar in Bangkok, scientists from the faculty of medicine at Ramathibodi Hospital announced that using GPOvir had led to a dramatic increase in drug resistance.

Penny-pinching has ensured that there are now more carriers of a more deadly version of the virus that is more difficult to treat.

In any case, the cost of the drugs pales into insignificance beside the cost of clinics, their maintenance and expert staff to administer the drugs, especially the more complicated second-line treatment. So penny-pinching takes more money away from general healthcare for all Thais.

Now the obsession with cost reduction has once again driven the government to a deadly mistake. Using the pretence of public interest, the Public Health Ministry announced on Nov 29 that it was allowing the copying of Stocrin, a critical ingredient in a highly-effective second-line ARV therapy, to be used only after first-line therapies become ineffective.

The ministry awarded what is called a compulsory licence yet again to the GPO, which claims that it can produce the drug for 700 baht per patient per month. Merck, the owner of the patent on Stocrin, currently sells its drug at a not-for-profit price of 1,300 baht per patient per month, covering about 19,000 patients.

The more things change the more they stay the same. In pinning the pharmaceutical industry into a corner, the Thai government hopes it can avoid accepting blame for the now urgent need for more second-line therapies, for which it is directly culpable.

Disregarding the issue of whether or not GPO, whose product has already put tens of thousands at risk, can actually produce the drug at its stated price and to the required quality, the decision poses further risks for Thais living with Aids.

Like any medicine that combats a virus, treatments must be continuously improved in order to reduce the threat of mutation. Indeed, there is every chance that current second-line therapies will soon become impotent in the face of an evolving disease.

But why will companies that invest millions of dollars across the globe bother researching into a disease if their returns are at risk from opportunistic governments? Right now 77 new Aids drugs are in development worldwide and it costs about US$800 million to develop a new medicine.

A future without new Aids drugs for Thais and other sufferers around the world is a truly harrowing prospect.

Rather than issuing an ultimatum, the government should respect the property rights that drove the development of Stocrin and other drugs. These same property rights give companies the incentive to create drugs and sell them in competition with each other.

The government has celebrated the 25th World Aids Day by trying to treat one blunder with another. How many more people have to die unnecessarily, at the hands of governments and activists who insist that patients deserve inferior products when there are effective medicines available? How many more will die when current treatments are rendered ineffective by the global pandemic and none are there to replace them? How much more of the healthcare budget will be wasted?

The government should accept the blame. But more importantly, it should learn from its mistakes before hurting more victims.

Bibek Debroy is a professional economist, Secretary-General of the PHD Chamber of Commerce and Industry, India, and former consultant to India's Ministry of Finance.