The two drugs affected are Kaletra, an HIV/Aids treatment drug, produced by US company Abbott Laboratories; and Plavix, which is used to treat heart patients and is produced by France's Sanofi-Aventis and Bristol-Myers Squibb in the US.
 
Welcoming the Thai government's decision, Virat Purahong, director of the Thai Network of People Living with HIV and Aids, said the licences for generic drugs could improve the government's leverage in negotiating with pharmaceutical companies.
 
"Before this, the companies would not budge. They were giving minuscule discounts," he said.
 
Michael Weinstein, president of US-based Aids Healthcare Foundation, also praised Thailand for stepping up the availability and use of generic life-saving drugs.
 
He said the government's "commitment to providing universal access to care is facing increasingly high drug costs".
 
Thailand has won international recognition for its quick launch of a national drug programme that has treated more than 82,000 HIV-positive patients, he said.
 
Criticism
 
However, the decision to break the patents drew criticism from Thailand's Pharmaceutical Research & Manufacturers Association, which said it could cause more companies to relinquish their patents and discourage foreign investors.
 
Critics say the move undermines intellectual
property rights [GALLO/GETTY]
The International Federation of Pharmaceutical Manufacturers & Associations said countries with severely limited healthcare resources should instead initiate "direct discussions with the companies that invest, develop and market medicines to directly address key health challenges".
 
The American Chamber of Commerce in Thailand was also critical, saying it sent a "negative signal" to foreign investors.
 
It said the move raised questions over "the government's commitment to transparency and support for intellectual property rights".
 
Under World Trade Organisation agreements on intellectual property, a government can issue a compulsory licence for the manufacture, import and sale of generic versions of drugs where there is a national public health emergency.
 
Brazil and India have taken such action, especially in the case of HIV medicines.
 
Oxfam, the international aid group, said compulsory licensing could cut Thailand's expenses for vital drugs by two thirds.
 
Tim Wainwright, Oxfam's regional director, said the key to reducing drug prices was to create competition among producers.
 
More than 500,000 people in Thailand are living with HIV, according to UNAIDS, the United Nations agency that co-ordinates the global fight against the virus.