Bangkok isn’t impressed with the offer Abbott Labs made this week to Brazil for its AIDS drug. A Thai health official says Thailand wants deeper price cuts than Brazil accepted or his country will break the patent on Kaletra. Vichai Chokevivat, an architect of Bangkok’s controversial policy to override patents, says Abbott’s offer of $1,000 per patient, per year to Brazil was too high compared to generic versions costing $695 a year.

“This is the same offer they made to Thailand a few months ago on the condition that we stop the CL. That is a condition we cannot accept,” he tells Reuters.

Talks with the three drug makers - Abbott, Merck and Sanofi-Aventis - haven’t produced a deal. So far, Thailand has only imported generic versions of Merck’s Efavirenz. Abbott is sticking to its offer of $1,000 per patient per year for a heat-stable version of Kaletra which can survive in tropical climates like Thailand without costly cold storage.

Talks with Abbott, which has refused to register new medicines in Thailand until the compulsory licence issue is resolved, resume in two weeks. “If the original price is 5 percent higher than the generic product, we will consider the original product,” he says. “If it is more, we will consider the generic product.”

Thailand, a former AIDS hotspot, has won praise for reducing infections and expanding drug treatment to more than 100,000 of the 580,000 Thais living with the disease. But the government says it faces budget pressures as more people need treatment through the national health scheme, which covers 80 percent of Thailand’s 63 million people.

It will spend $100 million on HIV-AIDS programs this year, but pharma’s defenders accuse the government of stealing intellectual property and question its spending priorities. The army-backed, post-coup government announced a 24 percent rise in annual military spending this week compared to a 4.6 percent rise for health care.

Health Minister Mongkol na Songkhla said this week he was considering two more licences this year that would allow the Government Pharmaceutical Organisation, the state drug maker, to buy or produce copycat versions. The GPO will also begin a five-month upgrade of its ageing factory in October to meet World Health Organisation standards, an issue drugmakers have highlighted in their criticism of Bangkok’s drug policies.

“I think they are under a lot of pressure from critics outside, but it will be a challenge,” Paul Cawthorne of Medicins Sans Frontieres says of the upgrade.

The WHO sets stringent standards for quality, safety and efficacy that are used by U.N. agencies, governments and NGOs in bulk purchasing drugs. Last year, Thai newspapers reported the Global Fund to Fight AIDS, Tuberculosis and Malaria stopped funding an AIDS drug production project because the GPO did not meet WHO standards.