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BANGKOK, Nov 30 (Reuters) - Thailand, facing ballooning costs for second-line HIV-AIDS drugs, has issued its first compulsory licence to make a cheaper version of Efavirenz, a life-saving medicine sold by a major international drug company.
Merck & Co Inc, which holds the patent on the drug also known as Stocrin, denounced a move by the Health Ministry to issue a five-year licence for local production and imports of a generic version of the anti-retroviral drug.
But AIDS activists and health experts cheered loudly.
"This is both a brave and a progressive step by the Royal Thai Government to place the interests of people living with HIV in Thailand front and centre," UNAIDS country coordinator Patrick Brenny told Reuters on Thursday.
Under World Trade Organization rules, governments can declare a "national emergency" and issue compulsory licences, allowing others to produce a patented drug without consent from a foreign patent owner.
Merck will receive a 0.5 percent royalty on sales of the locally produced drug, the Health Ministry said in a statement.
Thailand, where 580,000 people are living with HIV/AIDS, has won international praise for its swift roll-out of a national drug programme that now treats more than 82,000 patients.
But as people live longer and treatment gets more expensive, the government's commitment to provide universal access to care is facing serious challenges, including high drug costs.
"The prices are very high, making it a big hurdle for patients to access them and the government cannot afford them," Thawat Suntrajarn, head of the ministry's Department of Disease Control, said in the statement.
"In the long run they need this anti-retroviral drug to live a normal life like others," he said.
Merck said the government made no attempt to consult the company, which sells Efavirenz for a non-profit price of 1,400 baht ($38.84) per month in Thailand.
"Issuing a compulsory licence is a serious decision that should be taken as a last resort when no other means exist to access essential patented technology," Merck's Thailand office said in a statement.
The Government Pharmaceutical Organisation, Thailand's state-owned drug maker, said it would import generic Efavirenz, currently sold by Indian drugmakers for 800 baht per month, until the GPO made its own version in June 2007.
The GPO will charge 700-800 baht per month for its Efavirenz, a "second line" drug used by people who suffer side effects or develop resistance to initial treatments.
A World Bank study of Thailand's drug programme projected that second-line therapy would account for more than half of spending on it by 2010 and could reach $500 million a decade later, up from a 2006 budget of $70 million.
Thawat said issuing the compulsory licence for Efavirenz would save the government 4 billion baht over the next five years. It could afford to treat 100,000 people, up from 17,000 who have access to the drug now.
In its study released in August, the World Bank said overriding drug patents required "high-level political resolve" because it would probably carry trade repercussions.
AIDS activists worried last year that Thailand would give up its override rights in free-trade talks with the United States, stalled by a political crisis which ended with a bloodless Sept. 19 military coup that ousted Prime Minister Thaksin Shinawatra. ($1 = 36.04 baht)