Pharmaceuticals
Newsletter
March 2006
China
Drugstore Retailing in China
Foreign investment in retail
business
MOFCOM Approval for foreign-
invested retail businesses
Opening and the location of
pharmacies
Distance restrictions for retail
pharmacies
Licensing and permit requirements
Professional evidence
Quality control for prescription and
OTC drugs
Contagious Diseases and
Compulsory Licenses
Australia
VIAGRA: The ongoing battle
between Pfizer and Eli Lilly
Malaysia
Framework of the proposed Medical
Devices Act (Malaysia)
Thailand
Intellectual Property Rights (“IPR”)
for Pharmaceuticals and Thai –USA
Trade Negotiations
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Asia Pacific
China
Drugstore Retailing in China
Statistics from a leading consultancy indicates that China’s over-the-counter
(OTC) drugs market in 2005 ranked the 4th largest worldwide behind the
United States, Japan and Germany.
China’s OTC market grew 11.2% in 2005, a significant increase compared
to some developed OTC markets (France, Germany, Japan) that all declined
in 2005. China is expected to climb to the third largest market in the next
five years.
In order to engage in the retail of drugs in China, foreign drugstore
companies need to navigate the general rules on foreign investment in retail
business, as well as specific regulations on pharmaceutical retailing,
including the location and type of retail business, staff and management
qualifications, and the quality and safety standards for the handling and
selling of drugs. In particular, before seeking approval from the relevant
retail commerce authorities, the proposed enterprise must first be licensed
by the appropriate drug administration.
Foreign investment in retail business
The primary rules regarding foreign investment in retail businesses are found
in the Commercial Sector Measures, and in the Handbook on foreign
investment in commercial enterprises, both promulgated by the Ministry of
Commerce (MOFCOM). (See below for a table of legislation referred to in
this article.)
Article 7 of the Commercial Sector Measures states that the minimum
registered capital for establishing a retail business is RMB 300,000. Recent
amendments to the Company Law have reduced this amount, but in theory
the amount of registered capital should reflect the business plan requirements
or financial feasibility study. In reality, however, the authorities will expect
foreign-invested businesses to have paid up capital of at least US$200,000
in order to operate effectively. In some cities, the tax bureau requires the
retail enterprise to have a minimum registered capital of RMB 5 million to
qualify as an ordinary VAT taxpayer and to issue VAT receipts.
Article 6 of the Commercial Sector Measures requires foreign investors to
have a good reputation, and not to have violated any laws or administrative
regulations in China. Companies that are financially sound and that have
particular commercial expertise and extensive international sales networks
are encouraged to set up operations.

Applications to establish a foreign-invested retail business must first be

submitted to the appropriate local authority at municipal, provincial or
autonomous region level. Unless the proposed retail operation breaches
restrictions on location, store numbers or total business area, or engages in
a certain line of retail business (including selling pharmaceutical drugs), there
is no need to seek central-level MOFCOM approval, and registration will
suffice.

Under the Procedures and the Guidelines, the relevant local authority will
undertake a preliminary review in accordance with the Commercial Sector
Measures to ensure that the stores comply with local planning regulations for
urban commercial outlets.

MOFCOM Approval for foreign-invested retail

businesses
Both wholly foreign-owned retail enterprises (Retail WFOE) and retail
joint ventures (Retail JV) must obtain central-level MOFCOM approval if:

• the stores are to be established outside the province where the

Retail WFOE is established;

• The business area of any one store exceeds 300 square meters;

• the Retail WFOE will have more than 3 stores (each having a
business area of more than 5,000 square meters) and the
foreign investor has more than 30 similar stores in China; or the
Retail WFOE will operate more than 50 stores (each having a
business area of more than 3,000 square meters) and the
foreign investor has more than 50 similar stores in China.

• the Retail WFOE’s activities include television, telephone, mail

order, Internet or vending machine sales; and

• the Retail WFOE’s activities involve books, newspapers,

periodicals, processed oil, crude oil, automobiles, agricultural
by-products and/or means of agricultural production,
pharmaceuticals, pesticides, mulching films, chemical fertilizers,
salt, tobacco, grain, vegetable oil, sugar and cotton.

For the application process, the Handbook requires the submission of a

Written Opinion Agreeing to the Preparation for Establishment of an
Enterprise, a Permit to Deal in Pharmaceuticals or a Consent Opinion
issued by the provincial-level Food and Drug Authority (“FDA”). It is
necessary to obtain the consent of the FDA before the retail application
is submitted.

After a preliminary examination of the documents, the provincial-level

commerce authority will submit the application to MOFCOM for
approval. If MOFCOM approves, it will issue an Approval Certificate for
a Foreign-Invested Enterprise.

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Opening and the location of pharmacies
The governing rules for establishing a pharmaceutical Retail WFOE or JV
come from the Pharmaceutical Law, the Implementing Regulations and the
Permit Administration Measures. Once an application has been submitted to
the local FDA, the FDA has 30 days in which to make a decision on whether
or not the applicant may proceed with the preparatory work.

After completing the preparatory work, the applicant must meet the following
requirements of Article 15 of the Pharmaceutical Law:

(1) the enterprise must have pharmaceutical technicians with legally

recognized qualifications;

(2) it must have a place of business, equipment, storage facilities and

a hygienic environment appropriate to pharmaceutical trading;

(3) it must have quality control management systems or quality control

personnel appropriate to pharmaceutical trading; and

(4) it must have rules and regulations ensuring the quality of the
pharmaceuticals to be traded.

Certain local authorities also impose distance restrictions on the location of

drugstores, including Beijing and Shanghai (see Distance Restrictions below).

Distance restrictions for retail pharmacies

Beijing – 350 meters

Article 6 of the Beijing Regulations sets a minimum distance requirement
of 350 meters between existing and proposed retail pharmacies.
However, the distance restrictions do not apply to “commercial center
areas” such as Xidan, Wangfujing Da Jie, Jianguomenwai Da Jie, etc.

Shanghai – 300 meters

According to the Shanghai Opinions (at the time of writing, we have not
been able to obtain the full text), and the Shanghai Regulations, new
retail pharmacies (including retail and chain stores) should select a
location which is of a distance of not less than 300 meters from existing
retail pharmaceutical enterprises. This restriction does not apply to
OTC-B medicine counters.

Licensing and permit requirements

Article 7 of the Permit Administration Measures requires retail pharmacies to
specify the types of medicines they will sell, for example prescription drugs
(Rx drugs) or OTC medicines, and to be licensed appropriately.

Under the Anesthetic and Psychotropic Drugs Regulations, retailing of

anesthetic drugs (e.g., heroin, morphine, methadone, etc.) and Category I
psychotropic drugs (e.g., Cathinone and Etryptamine etc.) has been
prohibited since November 1, 2005. Retailing of Category II psychotropic
drugs (e.g., benzfetamine, medazepan, prazepam, secbutabarbital,
temazepam, etc.) is subject to local FDA approval. The SFDA, the Ministry
of Health and the Ministry of Public Security publish Catalogs classifying
anesthetic and psychotropic drugs.

3
Professional evidence
As part of the licensing process, the applicant must provide the local FDA
with documentary evidence of: the professional qualifications and experience
of all key personnel (technicians, senior management, legal representative);
the types of pharmaceuticals to be sold; the particulars of the place of
business, warehouse facilities and equipment of the proposed retail business.

Within 30 days, under Article 9 of the Permit Administration Measures the

local authority must confirm whether or not the preparatory application
process has been successful. If successful, the applicant must then submit
formal documentation including the application for a Permit to Deal in
Pharmaceuticals; approval documents issued by the relevant Administration
for Industry and Commerce; floor plans and confirmation of the land use
rights (or certificate of ownership) of the proposed premises; certificates
of technical qualification and professional appointment of the enterprise
personnel; and quality management documents, including a list of the main
facilities and equipment.

In considering the grant of a Permit to Deal in Pharmaceuticals, the local

FDA will consider the local demographics including the size of the
permanent population, location, traffic conditions, community needs and
whether the proposed enterprise actually makes it easier for the public
to access pharmaceutical drugs.

Quality control for prescription and OTC drugs

Within 30 days of receiving the Permit to Deal in Pharmaceuticals the
applicant must apply to the local FDA for a certificate in Good Sales Practice
(GSP). The GSP Certification Measures and GSP Standards regulate such
things as the personnel qualification requirements, minimum warehousing
areas, facilities and equipment, and standards for the storage and display
of drugs.

GSP certification requirements vary between local FDAs, and are usually
available on appropriate websites. In Beijing and Shanghai, for example,
the authorities will conduct technical and site inspections to ensure that the
enterprise is GSP compliant, and then issue a public announcement indicating
that the applicant has met the minimum standards. Assuming there is no
complaint or objection concerning the proposed establishment, a GSP
Certificate will be issued, valid for 5 years.

There are separate administrative regimes for Rx and OTC drugs. OTC drugs
are divided into two classes (OTC-A and OTC-B), according to the safety of
such medicines. The FDA periodically publishes lists of OTC drugs,
covering, for example, western medicines and traditional Chinese medicines .
As at February 6 2006 the FDA lists covered over 4,300 types of OTC drugs,
published in 6 batches.

4
Article 9 of the Rx and OTC Classification Measures requires retail
pharmacies to obtain a Permit to Deal in Pharmaceuticals before they can
handle Rx and OTC-A medicines. Under Article 19 of the Circulation
Regulations, other retailers may apply to the local FDA to sell OTC-B drugs
such as certain types of vitamins, aspirin-based medications, dietary
supplements, etc.

Selected list of legislation

Full Name Short Name Promulgating Date of

(for the Authority Promulgation
purposes of
this article)

Regulations on Foreign Investment in Retail Business

Measures for the Commercial Ministry of April 16, 2004

Administration of Sector Commerce
Foreign Investment Measures (“MOFCOM”)
in the Commercial
Sector

Handbook of The MOFCOM September 1,

Guidelines for Handbook 2005
Foreign-Invested
Commercial
(Distribution)
Enterprises

Procedures for The MOFCOM August 5, 2005

Handling Foreign- Procedures
Invested
Commercial Sector
Projects

Guidelines for The MOFCOM August 5, 2005

Foreign-Invested Guidelines
Commercial
Enterprise
Applications

Notice on Delegation MOFCOM December 9,

Delegating Notice 2005
Authority to Local
Departments
Regarding the
Verification and
Approval of
Foreign-Invested
Commercial
Enterprises

Regulations on Foreign Investment in Retail Pharmacies

Law of the People’s Pharmaceutica National February 28,

Republic of China People’s

5
on the l Law Congress 2001
Administration of (“NPC”)
Pharmaceuticals

Implementing Implementing State Council August 4, 2002

Regulations for the Regulations
Law of the of the
People’s Republic of
China on the
Administration of
Pharmaceuticals

Measures for the Permit State Food February 4,

Administration of Administration and Drug 2004
Permit to Deal in Measures Administration
Pharmaceuticals (“SFDA”)

Administrative Regulations on Pharmaceutical Retailing

Regulations for the Anesthetic State Council August 3, 2005

Administration of and
Anesthetic Drugs Psychotropic
and Psychotropic Drug
Drugs Regulations

Catalog for The Catalogs Ministry of September 27,

Anesthetic Drugs Health 2005
and Catalog for (“MOH”);
Psychotropic Drugs SFDA; and
Ministry of
Public
Security

Measures for the GSP SFDA April 24, 2003

Administration of Certification
Good Sales Practice Measures
Certification of
Pharmaceuticals

Standards for GSP SFDA July 1, 2000

Quality Standards
Management in
Dealing in
Pharmaceuticals

Detailed Quality SFDA November 16,

Implementation Management 2000
Rules for Quality Rules
Management in
Dealing in
Pharmaceuticals

Measures for the Rx and OTC SFDA June 18, 1999

Classification and Classification
Administration of Measures

6
 Prescription and
Over-the-Counter
Drugs (for Trial
Implementation)

Provisional Circulation SFDA December 28,

Regulations on the Regulations 1999
Circulation of
Prescription and
Over-the-Counter
Drugs

Local Store Distance Regulations

Provisional Beijing Beijing Drug August 12, 2004

Regulations of Regulations Administration (effective
Beijing Municipality August 17)
for the
Establishment of
Pharmaceutical
Retail Enterprises

Notice of the Shanghai Shanghai FDA March 31, 2004

Shanghai Food and Regulations
Drug Administration
Concerning the
Transmission of the
Measures for the
Administration of
the Permit to Deal in
Pharmaceuticals

Opinions Shanghai General Office 2001 (Exact

Concerning Opinions of the promulgation
Strengthening the Shanghai date unknown)
Planning and Municipal
Administration of People’s
the Pharmaceutical Government
Retail Industry in
Shanghai
Municipality

Contagious Diseases and Compulsory Licenses

China’s new Measures on Compulsory Patent Licensing Related to Public
Health Issue, providing rules for granting compulsory licenses for medicines
used to prevent or control contagious diseases, came into effect on January 1,
2006.

Production for domestic market

The new measures effectively implement the WTO Declaration on the TRIPS
Agreement and Public Health, adopted on November 14, 2001. That
Declaration was adopted to emphasize the importance of interpreting the
TRIPS Agreement in a way that supports public health. In particular, the

7
Declaration emphasized that public health crises, “including those relating
to HIV/AIDS, tuberculosis, malaria and other epidemics,” can constitute
a “national emergency” and thus justify the grant of compulsory licenses
for the production of relevant medicine in accordance with the TRIPS
Agreement.

The new measures also provide that the relevant State Council authorities
can request the State Intellectual Property Office (SIPO) to grant a
compulsory license in accordance with Article 49 of China’s Patent Law
for pharmaceuticals to treat certain types of contagious disease if China has
the necessary production capabilities. Article 49 of the Patent Law authorizes
the grant of compulsory licenses if the country experiences a “state of
emergency” or an “extraordinary situation” or for the “public interest.”

The measures elaborate that the country’s efforts to prevent or control the
emergence or epidemic of a contagious disease as well as treatment of a
contagious disease constitute action for the “public interest” under Article 49
of the Patent Law. Furthermore, when when a public health crisis is caused
by the emergence or epidemic of a contagious disease, a “state of emergency”
under Article 49 of the Patent Law is constituted.

“Contagious diseases” are defined as AIDS, tuberculosis, malaria and other

contagious diseases specified in China’s Law for the Prevention and
Treatment of Contagious Diseases.

“Pharmaceuticals” are defined as any patented products, or products

manufactured using patented processes, that are used in the medical field to
treat “contagious diseases,” including active ingredients required for the
manufacture of such products and diagnostic reagents required for the use of
such products.

Parallel imports
The TRIPS Agreement provides that WTO members can make their own
rules regarding whether or not to permit parallel imports, and the 2001
Declaration reiterates that WTO members are free to make their own rules
concerning parallel imports.

The new Chinese Measures specifically provide that where a patent has been
granted in China for a pharmaceutical used for the treatment of a given
contagious disease, it is not necessary to apply for a compulsory license when
such pharmaceuticals manufactured and sold by (or pursuant to a license
from) the patent holder are purchased in another country or region and
imported into China.

Compulsory licenses for import and export

A key issue left unresolved by the WTO 2001 Declaration was how to deal
with the requirement imposed by Article 31(f) of the TRIPS Agreement that
production under compulsory licensing must be predominantly for the
domestic market. This requirement limited the export of generic copies of
patented products produced under a compulsory license and indirectly limited
countries unable to manufacture their own pharmaceuticals from importing
such generic products.

This issue was addressed by the WTO Decision on Implementation of

Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public

8
Health, adopted on 30 August 2003. This WTO Decision permits the export
and import of pharmaceuticals manufactured under a compulsory license in
accordance with the rules set forth in the Decision.

The new Chinese measures implement the 2003 WTO Decision as well as the
2001 WTO Declaration. Under the new regime, if a patent has been granted
for a given pharmaceutical used for the treatment of a contagious disease and
China does not have the capability to manufacture the pharmaceutical or its
production capabilities are inadequate, the relevant State Council authorities
may apply to SIPO for a compulsory license. The party so licensed may
import pharmaceuticals manufactured to address China’s public health
problem by a WTO member using the system established by the 2003 WTO
Decision. The licensee must pay reasonable compensation to the patent
holder, unless the manufacturer has already paid the patent holder.
Pharmaceuticals imported pursuant to a compulsory license may not be
re-exported.

As for export, the relevant State Council authorities may apply to SIPO for a
compulsory license if a WTO member has notified the WTO TRIPS Council
that it wishes to import a pharmaceutical for the treatment of a certain
contagious disease or if a least developed country that is not a WTO member
has notified the Chinese government through diplomatic channels that it
wishes to import such pharmaceuticals. In such circumstances, the licensee
may, using the system established by the 2003 Decision, manufacture the
relevant pharmaceutical and export it to the WTO member or country. The
licensee must also pay reasonable compensation to the patent holder.

Chiang Ling Li
chiang.ling.li@bakernet.com
Tel: +852 2846 1890

Australia
VIAGRA: The ongoing battle between Pfizer and Eli Lilly
Pfizer has filed an application for special leave to appeal to the High Court of
Australia seeking to overturn the decision of the Full Court of the Federal
Court of Australia and invalidation of its Australian VIAGRA patent.

In late 2005 the Full Court delivered judgment in Pfizer Overseas

Pharmaceuticals & Ors v Eli Lilly and Company & Ors [2005] FCAC 224,
confirming the trial judge’s decision to invalidate the key method claim
contained in Pfizer’s Australian patent relating to its mega-drug, VIAGRA.

Pfizer and Eli Lilly have been engaged in global patent warfare for some
years. Pfizer has claimed that Eli Lilly’s CIALIS product infringes its patent
rights in various jurisdictions worldwide. Pfizer’s patent covers, inter alia,
a method of treating impotence which involves administration of selective
cGMP PDEv inhibitors – marketed commercially in the form of VIAGRA.
Eli Lilly has systematically attacked the validity of Pfizer’s patents on
various grounds, including want of novelty, lack of inventive step
(obviousness), and lack of fair basis.

9
The decision of the Full Court in Australia is notable not only because of its
judicial confirmation that Pfizer’s Australian patent is invalid, but the
grounds upon which it made its ruling.

The trial Judge held that the method claim was invalid on the basis that it was
obvious; that it did not disclose an inventive step in light of the common
general knowledge in Australia as at the priority date of 13 May 1994. The
trial Judge also found that the claim was not fairly based on matter disclosed
in the patent specification.

On appeal, two of the quorum of three Justices of the Full Court upheld the
Judge’s on fair basis – ruling that the method claim “travels well beyond” the
range of compounds disclosed in the body of the specification. Justice
Crennan dissented on this point.

However, the Full Court reversed the trial Judge’s decision in relation to
obviousness. The Full Court unanimously held that the Pfizer patent,
including the relevant method claim, disclosed an inventive step – in applying
the test for obviousness, the Court was not convinced that evidence from
expert witnesses relied upon by Eli Lilly supported the contention that use
of selective cGMP PDEv inhibitors for the treatment of impotence would
have been revealed in 1994 by a process of routine investigation, taking into
account relevant prior art.

Notably, the approach taken by the Full Court in Australia does not accord
with decisions of the United Kingdom Court of Appeal and the European
Patent Office where Eli Lilly succeeded in invalidating Pfizer's corresponding
patents on the ground of obviousness.

Pfizer continues to defend its US patent in the USPTO, and is engaged in

ongoing litigation against Eli Lilly in Canada.

It is not yet known when the High Court will hear Pfizer’s special leave
application. If the Court permits Pfizer's appeal, it is expected that Eli Lilly
will also press for re-argument of all invalidity grounds (including
obviousness) before the High Court. Interestingly, since the Full Court’s
decision, Justice Crennan – whose minority opinion on fair basis would have
upheld the validity of the Pfizer patent - has been appointed to the High Court
bench.

Elisabeth Coffey
elisabeth.coffey@bakernet.com
Tel: +612 9225 0386

10
Malaysia
Framework of the proposed Medical Devices Act (Malaysia)

Introduction
The Medical Devices Act (MDA) is expected to be passed some time this
year. The Ministry of Health Malaysia (MOHM) has been charged to
develop and implement a regulatory framework to control medical devices
in Malaysia under the MDA.

The aims of the MDA are:

• to protect public health and safety

• to allow patients for earlier access to new technology for early

detection, diagnosis and treatment

• to facilitate trade and invigorate the medical devices industry

The MOHM is planning to implement the MDA in stages, beginning with a

voluntary registration of the medical devices scheme, then moving to
mandatory registration in 2008. During the first voluntary stage
establishments dealing with medical devices in Malaysia are encouraged to
register their establishments and the devices.

What is a medical device under the MDA?

‘Medical device’ means any instrument, apparatus, implement, machine,
appliance, implant, in vitro reagent or calibrator, software, material or other
similar or related article:

intended by the manufacturer to be used, alone or in combination, for human

beings for one or more of the specific purpose(s) of:

• diagnosis, prevention, monitoring, treatment or alleviation of disease,

• diagnosis, monitoring, treatment, alleviation of or compensation for

an injury,

• investigation, replacement, modification, or support of the anatomy

or of a physiological process,

• supporting or sustaining life,

• control of conception,

• disinfection of medical devices,

• providing information for medical or diagnostic purposes by means

of in vitro examination of specimens derived from the human body;

and, which does not achieve its primary intended action in or on the human
body by pharmacological, immunological or metabolic means, but which
may be assisted in its intended function by such means.

11
Regulated activities
The MDA will regulate the following stages of activity involving medical
devices:

Pre market stage

Manufacturers, importers/exporters will need to ensure product safety and

performance standards. There will be requirements for pre market
review/evaluation, pre market testing, labeling and manufacturing site
inspections and audits.

Placement on market

Vendors of medical devices will be required to fulfill after sale obligations.

The MOHM will establish a registration system for medical devices and there
will be control over advertisements of medical devices.

Post market

Vendors and users will be expected to undertake, inter alia, performance

monitoring, decommissioning and product alerts/recall.

Classification of medical devices for registration

All medical devices will be required to be registered with the MOHM.
Medical devices will be classified into 4 classes according to their risk level:

Class Risk Level Devices examples

Class A Low Simple surgical instruments/tongue depressors

Class B Low/Moderate Hypodermic needles/suction equipment

Class C High/Moderate Lung ventilator/orthopaedic implants

Class D High Heart valve/implantable defibrillator

Medical devices falling under Class A will only be required to be listed

whereas medical devices falling under Classes B,C and D will need to go
through a full registration requiring product quality assurance, production
quality assurance and/or batch test.

Medical devices which have been approved by recognized regulators eg. The
US FDA or regulatory authorities from the EU and Canada may be able to go
through an abridged process. Medical devices which have not been approved
by recognised regulators will have to go through a conformity assessment.

Timeline of expected compliance

The MDA is expected to be passed and to come into force in 2006.
A voluntary registration will be put into place until about mid-2007 before
mandatory compliance. The purpose of the voluntary registration is:

• to familiarize all affected parties with the registration process

• to gauge the readiness of medical devices establishments in

conforming to the regulatory requirements

12
• to prepare a smooth transition into the mandatory phase before the
full enforcement of medical devices regulation

• to obtain a profile of the Malaysian medical devices industry

The system of registration will be web based. The following parties who
operate their businesses in Malaysia are expected to participate in this
voluntary scheme:

• Manufacturers of medical devices

• Exporters and importers of medical devices

• Distributors/vendors of medical devices

All data submitted will be kept confidential. The mandatory compliance is

expected from mid-2007 and full enforcement of the MDA is expected in
2008.

Kherk Ying Chew

kherk.ying.chew@bakernet.com
Tel: +603 2055 1823

Thailand
Intellectual Property Rights (“IPR”) for Pharmaceuticals and
Thai–USA Trade Negotiations
In recent weeks there has been a high level of media commentary concerning
ongoing negotiations between Thai and US trade representatives aimed at
producing a Free Trade Agreement (FTA) between the two countries. Much
of that commentary has focused on public criticism of US proposals to
strengthen intellectual property rights for pharmaceuticals. Attitudes have
polarized, and issues have been politicized. The debate is partisan, and
frequently ill-informed.

During the debate, though, two things have been particularly noticeable.
Firstly, no-one is publicly acknowledgingthat IPRs have a legitimate role
to play in relation to pharmaceuticals. Secondly, the pharmaceutical industry
itself is mute.

US trade representatives have sought an improved period of patent protection

to compensate for excessive delays by the Thai Patent Office in processing
patent applications and effective data protection to give recognition to Article
39 of TRIPS. Neither of these proposals are unreasonable, but they have met
with widespread condemnation.

It is instructive to summarize arguments used by the anti-IPR lobby groups.

These arguments go uncontested in Thailand’s media. This is unfortunate and
not in the interests of informed discussion.

1. There is little innovation in Thailand. Very few patents are filed by

Thai nationals. Therefore patents are unfair.

13
2. Generic manufacturers can produce the same drug much more
cheaply than the original manufacturer. Therefore they should be
allowed to do so.

3. Originators should not be allowed to monopolise the sale of their

original drugs at the expense of Thai consumers because generic
manufacturers will be prevented from producing cheaper versions of
these drugs.

4. Poor people cannot afford expensive medicines. Their right of access

to the best treatment available is more important than recognizing the
rights of any innovator.

5. The sooner patents expire the faster people can have access to cheap,
new drugs. For doctors this means they can save lives.

6. The five year-old healthcare-for-all system could fall on its knees

because its sustainability depends on the availability of cheap
generics.

7. The whole system of national health would be more expensive

because the FTA would make Thailand dependent on original drugs
that are more expensive than generic drugs.

8. The FDA has to refer to clinical test data of the original drug. If that
data is protected a generic cannot be approved.

9. Data protection is even more dangerous than patent protection

because government cannot demand compulsory licensing of data.

Notable features of these arguments include the following:

(a) The assumption that there will still be new original drugs, even
without IPR recognition. None of these arguments addresses the
question “What is needed to ensure there will be new original
drugs”?

(b) The assumption that other people will continue to produce new
original drugs, coupled with the assumption that if there is any
financial burden involved, Thailand should not have to share it.

(c) A blurring of the distinction between a new drug and an existing

drug. In reality the invention of a new drug takes nothing away from
anyone. Rather, it confers something which previously did not exist.

(d) No one seems to considers the possibility of negotiating outcomes

that are mutually acceptable to originators and users, for example, in
the form of licences and licensed rights to use IPR.

(e) The assumption that any recognition of IPR will inevitably mean
unacceptably high prices.

(f) Government should not be expected or required to play any role in

supporting or subsidizing the prices of new original drugs.

(g) All Thai consumers are in the same economic category. None can
afford to pay an originator’s price.

14
Asia Pacific Contacts It has been observed that a society’s attitudes towards IPR can say as much
Australia about that society as it does about IPT generally. It can be the case that even
Richard Gough the same society can have different attitudes to IPR at different stages of its
E-mail: richard.gough@bakernet.com development. In the USA after the Great Depression government the courts
Tel: +612 9225 0257
were less favourably inclined towards IPR than they subsequently became
Hong Kong
with increased prosperity and innovation following World War II.
Anita Leung
Email: anita.leung@bakernet.com
Tel: +852 2846 1741
Will Thailand have a similar experience in the future?
Peggy Cheung
Email: peggy.cheung@bakernet.com Peerapan Tungsuwan
Tel: +852 2846 1755 peerapan.tungsuwan@bakernet.com
Indonesia Tel: +66 2636 2000 ext 4334
Erna Kusoy
Email: erna.l.kusoy@bakernet.com Say Sujintaya
Tel: +62 21 515 4895
say.sujintaya@bakernet.com
Japan
TelL +66 2636 2000 ext 4545
John Kakinuki
Email: john.kakinuki@bakernet.com
Tel: 81 3 5157 2703 William McKay
Malaysia william.t.mckay@bakernet.com
Chew Kherk Ying Tel: +66 2636 2000 ext 4105
Email: kherk.ying.chew@bakernet.com
Tel: +60 3 2055 1823
Adeline Wong
Email: adeline.wong@bakernet.com
Tel: +60 3 2055 1880
People.s Republic of China

Winston Zee
Email: winston.zee@bakernet.com
Tel: +852 2846 1917
Stephen Nelson
Email: stephen.nelson@bakernet.com
Tel: +852 2846 1923
Nancy Leigh
Email: nancy.leigh@bakernet.com
Tel: +852 2846 1787
Chiang Ling Li
Email: chiang.ling.li@bakernet.com
Tel: +852 2846 1890
Philippines

Christopher Lim
Email: christopher.lim@bakernet.com
Tel: +63 2 819 4907
Singapore

Ken Chia
Email: ken.chia@bakernet.com
Tel: +65 6434 2558
Shirley Wong
Email: shirley.wong@bakernet.com
Tel: +65 6434 2570
Taiwan

Joy Pan
Email: joy.pan@bakernet.com
Tel: +886 2 2715 7253
Thailand

Peerapan Tungsuwan
E-mail: peerapan.tungsuwan@bakernet.com
Tel: +66 2 636 2000 ext. 4334
Vietnam

Fred Burke
Email: fred.burke@bakernet.com
Tel: +84 8 823 6238

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