Merck & Co has offered to cut the price of its HIV/AIDS drug efavirenz in Thailand, sold by marketing partner Bristol-Myers Squibb as Sustiva, or propose a voluntary licence for the drug’s production in the country, following the Thai government’s shock announcement that it would issue a compulsory five-year licence to manufacture the drug domestically, reports the Financial Times.

The government said it had decided to use, for the first time, the power to override patents permitted by the World Trade Organisation in cases of national emergency, because informal talks with Merck on lowering the drug’s price had failed. Under the compulsory licence, Thailand’s state-owned drugmaker, the Government Pharmaceutical Organisation, would start making efavirenz next June, at half the cost of the Merck drug.

This development, says the government, would save 4 billion baht over five years and enable it to treat as many as 100,000 people, compared to the 20,000 who are currently able to receive the patented product. Merck would receive a royalty of 0.5% on sales of the locally-manufactured version and, until GPO production began, the drug would be imported, said officials.

At present, about 84,000 of Thailand’s 600,000 HIV/AIDS patients receive ‘GPO-vir’, a first-line, triple-combination of stavudine, lamivudine and nevirapine made by the GPO. However, many users suffer problems of side-effects and resistance to it, and need to move on to a different combination treatment, which includes efavirenz.

Merck says it received no consultation or warning from the government before the compulsory licence was issued on November 29. “Issuing a compulsory license is a serious decision that should be taken as a last resort when no other means exist to access essential patented technology,” a company statement added.

The American Chamber of Commerce in Thailand also criticised the government's move, warning that “surprise actions such as these send a negative signal to foreign investors in Thailand regarding transparency and support for intellectual property rights.”

Merck has been selling efavirenz to Thailand at a no-profit price since 2001 and, earlier this year, it reduced the price by a further 20%.