Like a zombie in a horror flick, the issue of compulsory licensing has emerged again in Thailand and just won’t die.

Compulsory licensing is a fancy term for government expropriation of one company’s intellectual property (IP), which is usually given to another profit-making company. For the past decade, so-called civil society activists have pressured successive Thai governments to override private property rights for medicines. From 1999 to 2006, they never made the sale, because Thai policymakers understood that they could achieve greater public-health gains by strengthening IP rights, which encouraged innovation and technology transfers in Thailand through partnerships with multinational pharmaceutical companies.

But in late 2006, activists took advantage of the military coup that temporarily removed Thailand’s democratic safeguards and called for the issuance of compulsory licenses for innovative HIV/AIDS and cardiac drugs. The latest Thai health minister appears to have embraced the compulsory-licensing policy and expanded it to include innovative cancer therapies. In essence, Bangkok is using compulsory licensing to force foreign drug companies to underwrite its universal drug-access program.

Let’s hope Thailand reconsiders compulsory licensing before it continues down a pointless cul-de-sac, one that has never produced long-term social and economic benefits.

In essence, Bangkok is using compulsory licensing to force foreign drug companies to underwrite its universal drug-access program.

In 2007, anti-IP activists championed local drug production by Thailand’s for-profit Government Pharmaceutical Organization (GPO). The GPO, however, has repeatedly failed to meet World Health Organization standards for production of antiretrovirals. The result was that Indian pharmaceutical companies, not local Thai producers, began exporting the drugs to Thailand and reaping windfall profits. This amounted to a direct transfer of revenues from innovator companies to Indian generics producers.

Anti-IP activists still claimed victory, citing a drop in drug prices as proof of their success. But the long-term harm caused by trampling IP rights outweighs a few bargain-basement prices. For one thing, the GPO’s low-quality drug copies (already in use) have led to a higher prevalence of viral-strain resistance to the most readily available HIV/AIDS therapies. Thailand’s nascent life-sciences sector is another major loser. Foreign direct investment fell substantially during the period following the compulsory-licensing order. Even so, the Thai ministry of health is pushing forward with its efforts to force some third-party private companies to either directly or indirectly foot the bill for the government’s promise of free, universal access to medicines.

The criteria for imposing a compulsory license are sweeping, making almost any drug eligible. Is a drug on the National Essential Drug list? Is it needed to solve important public health problems? Will it help prevent or control outbreaks and pandemics? Is it considered “life-saving”? If the answer to one or more of these questions is yes, then a drug is subject to compulsory licensing in Thailand.

Because “only” 15 percent of patented products are affected by the new policy—and only for “public use”—the health ministry asserts that Thailand is upholding IP rights. This claim is risible. The Thai government has capped royalties for expropriated drugs at 0.5 percent of their sales value. That is all the compensation that the drug makers receive.

The health ministry’s short-term mentality may impose greater costs on Thai patients and families down the road. Setting aside the long-term harm to Thailand’s investment climate, innovative pharmaceutical companies operating in Thailand currently sponsor extensive corporate social responsibility programs that go well beyond discounted or free medicines. These programs—which include infrastructure and other public health projects valued in the millions of dollars annually—are funded by some of the very same companies whose drug products have been targeted for expropriation.

Is there any expectation that generic exporters will fund Thai infrastructure development? Will they back joint scientific exchanges and support nursing and other public-health education programs currently underwritten by the innovator companies? In terms of future research and development, will the lowest-cost bidder supplant brand-name drug companies currently conducting dozens of clinical trials annually in Thailand? Has the Thai ministry of health even paused to calculate the enormous economic and social value of these programs?

Simply put, Thailand’s costly universal health programs cannot be sustained by robbing private companies of their intellectual property rights. Let’s hope that cooler minds emerge within the Thai government before broad-scale compulsory licensing begins to cause serious damage.

Susan K. Finston is an adjunct fellow at the Institute for Policy Innovation.

Photograph by AFP/Getty Images.