The decision comes at the protest of the World Health Organization, which wanted the country to come to a compromise solution with the drug companies to negotiate lower prices.
The WHO also has concerns that government-produced generics will not be of the same quality or effectiveness compared to the patented drugs.
The drugs involved are Kaletra, an HIV/AIDS antiretroviral drug produced by Abbott Laboratories from Illinois, and the blood-thinning medication Plavix, a popular drug produced by Bristol-Meyers Squibb. Thailand's distribution of licenses to make the drugs is permitted by World Trade Organization rules, which say the country can declare a "national emergency" to produce the drugs and override held patents.
Thailand's breaking of the local patent on Kaletra comes four months after the country broke the patent on another HIV/AIDS drug, Efavirenz by Merck.
Among its population of 64 million people, Thailand has more than 580,000 people living with HIV/AIDS, and its national health care system attempts to treat more than 82,000 HIV-positive people.
The move to make generics is expected to save the government $24 million in costs: Treating a person using Kaletra costs the government more than $4,000 a year, whereas using a generic would cost an estimated $1,400 a year, meaning the comparative cost of using a generic is up to two-thirds less.
Kaletra is used in Thailand for patients whose HIV has overpowered a weaker government-produced drug given to them as a first line of defense. Plavix, the other drug that Thailand broke the patent for, is one of the top five drugs sold worldwide, with sales of nearly $6 billion in 2005 alone.
Breaking patents and licensing these generic drugs could improve the Thai government's ability to negotiate lower drug prices with pharmaceutical companies, the director of the Thailand-based Aids Access Foundation, Nimit Tien-udom, was reported as saying by the Thai News Agency.
Thailand is not the only country to break patents: India and Brazil are examples of other countries that produce generic versions of patented drugs under the "national emergency" regulations of the WTO.
A Canadian company also produced a generic version of Kaletra briefly in 2006 for the worldwide market until it was forced to stop.