Global Insight Perspective | |
Significance | A new government procurement decree, which would remove the state-run GPO's monopoly to supply state hospitals has been approved by Thailand's cabinet, and is currently awaiting approval from the State Council. |
Implications | Critics claim that the removing of the monopoly would hamper the GPO's ability to supply essential drugs, that the price of drugs would rise and that private companies would be unable to match the GPO in terms of quality. However, the Thai Pharmaceutical Manufacturers Association (TPMA) has disputed these claims and given its enthusiastic support to the draft resolution. |
Outlook | Given the widespread criticism, the passing of the decree in its current form cannot be considered a fait accompli. For example, it is possible that new mechanisms will be introduced in order to ensure a smooth transition to a free-market system. A key consideration in any new legislation would be the fundamental role that is played by the GPO in terms of Thailand's compulsory licensing policy. |
Following on from the Thai cabinet's approval of the draft of the government procurement decree, approximately 500 members of the GPO's labour union protested in front of the country's Ministry of Health (MoH) building last Tuesday (13 November), reports the Nation. According to the head of the GPO, Dr Witit Artavakun, the new decree would result in reduced revenues for the GPO, which would mean that the company would be unable to produce sufficient quantities of essential drugs. Meanwhile, GPO board chairman Vichai Chokewiwat has suggested that the new decree would damage Thailand's compulsory licensing policy.
A number of other elements have also come out in support of the GPO. The Nation cites the example of the director of a hospital in the province of Loei who fears that the quality of drugs supplied by the private sector will not match the quality of the drugs supplied by the GPO. Meanwhile, the manager of the Foundation for Consumers, Salee Ong-somwang, voiced fears that private drug companies would collude together in making bids and that drug prices would consequently rise.
Cabinet Approved Draft Resolution without MoH Backing
According to Thai deputy health minister Morakot Kornkasem, "it is a mistake to endorse the draft of the government procurement decree because it did not consider the pros and cons or the impact of the cancellation of the special purchase procedure." Morakot based his criticism on fears that supplies of drugs for treating essential drugs for serious diseases would be diminished as a result of the ending of the state-run GPO's monopoly. Therapeutic categories that Morakot has highlighted as being at particular risk include drugs for treating thalassemia, avian influenza (bird 'flu), and HIV/AIDS.
Aside from the specifics of the draft resolution, Morakot has also criticised the fact that the Thai cabinet approved the draft resolution without the receiving a recommendation from the MoH. In light of this, he has appealed to Prime Minister Surayud Chulanont to withdraw it.
Local Drug Industry Gives Support to Draft Resolution
By contrast, the Thai Pharmaceutical Manufacturers Association (TPMA) has given its enthusiastic support to the draft resolution. According to TPMA president Chernporn Tengamnuay, "if the Cabinet revises the resolution, it would not only affect pharmaceutical firms but also the public health system." Chernporn's support for the draft resolution is based on the fact that the GPO currently accounts for a dominant 70% share of Thailand's market, which means that small and medium-sized drug companies struggle to stay afloat. However, with the lifting of the GPO monopoly, these companies would be able to supply medicines to public hospitals at competitive prices. At the same time, Chernporn appealed to the GPO to concentrate on the higher end of the market, given that the state-run company has the resources to engage in R&D.
Outlook and Implications
The removal of the GPO's monopoly for supplying state hospitals would lead to a fundamental shake-up of Thailand's pharmaceutical market. However, despite receiving cabinet approval, the government procurement decree is currently being reviewed by Thailand's Council of State, and so its adoption in its present form cannot be considered a fait accompli.
Curiously, despite Kornkasem's stinging criticism of the decree, health minister Dr Mongkol na Songkhla seems to have been careful not to rock the boat, and has merely appealed for the government to create regulations that would allow the GPO to operate in a free market on an equal footing alongside the private sector. Moreover, he has stated that he expects the price of drugs to decrease.
According to the TPMA, Thailand's drug market is worth approximately 80 billion baht (US$2.5 billion), although 70% of this is derived from imported drugs.