Brazil, Abbott, & AIDS Drugs Patents
Brazil, Abbott, & AIDS Drugs Patents
This is a controversial issue emerging now in Brazil, raising issues concerning intellectual property and product patent rights, and the intertwining of this with HIV drugs and their availability in developing areas like Africa and in other countries such as Brazil, or perhaps China and Japan. Differences of opinion are clear between advocates, Brazil, the US government, and industry. In the interest of discussion here are a number of articles written in the past week in the media including from the Wall St Jnl, NY Times, and others. The links immediately below are to articles previously published & archived on the NATAP website. These are followed by more recent articles. The writers of many of these articles clearly have their own opinions about the issue and express it. Some writers take shots at Brazil and it's motives.
Brazil & Kaletra, mixed opinions As Brazil Aims for Cheaper AIDS Drug
US Monitoring Brazil Plan to Break AIDS Drug Patent
More on Brazil & AIDS Drugs Patents
Brazil Wants to Break Patent to Get Out of Paying the Bill
Brazil has threatened to break a patent for Kaletra, one of three anti-retrovirals made by Abbott Laboratories Inc. Brazil said the price of Abbott's combination Lopinavir and Ritonavir pill is so high it created a public health threat. Brazil is encouraging other countries to use the World Trade Organization's rules on patents to challenge pharmaceutical giants in their pricing policy on AIDS drugs
The threat is credible and appears to be legal under the World Trade Organization's Doha Declaration (an amendment to the WTO's TRIPS agreement on trade-related intellectual property rights).
The Doha Declaration on the TRIPS Agreement and Public Health, adopted by the WTO Ministerial Conference in November 2001, affirms that the TRIPS Agreement should be interpreted and implemented so as to protect public health and promote access to medicines for all. The Declaration gives the right of WTO Members to make full use of the safeguard provisions of the TRIPS Agreement to protect public health and enhance access to medicines.
The WTO Declaration explicitly states that "intellectual property protection is important for the development of new medicines" and member countries made an unequivocal point of "reiterating our commitment to the TRIPS Agreement." Furthermore, the WTO members agreed to address the HIV/AIDS pandemic while "maintaining our commitments in the TRIPS Agreement." Article 31 (f) of the TRIPS Agreement stipulates that a compulsory license must be issued predominantly for the supply of the domestic market of the Member granting the license. Anti-retroviral virus treatment for HIV was the main impetus for this initiative.
Health Minister Humberto Costa said his country's actions were not primarily intended to set an example but to save the government millions on health costs. Oh, is that right? So the drug is available and Brazil could pay for it -- they would just like to choose not to do so. This isn't really a public health threat, only a government that would like to get out of paying for healthcare for its citizens. I wish I could choose my own payments for my bills.
In recent years, Brazil has repeatedly managed to get price reductions on drugs from big pharmaceutical makers by threatening to break patents. Brazil now says it would save US$54 million (euro44.4 million) annually by creating a generic equivalent of the pill.
Brazil is also in negotiations with two other makers of AIDS drugs, Merck & Co. and Gilead Sciences Inc. Brazil is seeking permission from the two companies either to produce generic equivalents or buy the drugs at discounted prices.
Abbott's combination Lopinavir and Ritonavir pill, Merck's Efavirenz and Gilead's Tenofavir are essential to Brazil's AIDS program, Costa said. The drugs would cost Brazil US$169 million (euro140 million) this year, or 67 percent of its annual budget for imported AIDS drugs. Not taken into account is that Abbott is already supplying drugs to Brazil at a loss.
On its face, this seems like a good outcome for people to access to cheap or free medicines. However, nothing in life is ever free and trying to kill the goose that laid the golden eggs will only bring short-term gain will long-term pain.
Pharmaceutical companies rely on government-granted patents to protect their huge investments in researching and developing new drugs. It takes 10-15 years and costs $800 million on average to bring a new medicine to market. If some countries try to break patents to get out of paying, guess who's going to foot the bill?
Without patents to protect all the inventions necessary to develop a drug for a limited time, others could simply copy the drugs immediately, offering their versions at a reduced price since they did not incur the high costs to develop the drug. This would seriously impact the pharmaceutical companies' ability to recoup their costs and reinvest in other research projects.
Brazil already legally makes copycat versions of several AIDS drugs, and has successfully forced international pharmaceutical companies to lower prices in the past by threatening to break patents. And for a country so concerns for it's citizens health, Brazil doesn't seem to mind adding a 9.6% import tariff for completed medicines and essential medical products. Apparently, it's not a public health threat unless the government is footing the bill.
Granted, it's the right of any nation to raise revenue but don't try to cloak yourself in some type of do-gooder image when you're really out to just save a buck. While the leaders of these countries are happy to lobby for more aid and demand that pharmaceutical companies offer their drugs at cost, they routinely tax medicines until they are unaffordable for the poor. These domestic taxes and tariffs directly prevent millions of their own citizens from receiving treatment.
Attacking patents and keeping high import tariffs only serves to hurt the sickest and poorest citizens in already poor nations. Let's hope that the Brazilian government understands that it must pay it's fair share.
Theft, extortion and AIDS
The Chicago Tribune
Two illegal and counterproductive tactics--extortion and theft--threaten to taint Brazil's otherwise successful campaign against HIV/AIDS. The Brazilians have given Abbott Laboratories of North Chicago an ultimatum to cut nearly in half the price of an AIDS drug. If Abbott doesn't comply by Thursday, Brazil might break the patent and make its own, generic knockoff of the drug.
This is not a case of a country that can plead wretched poverty or a dire medical emergency. Brazil has one of the largest economies in the world and a relatively low incidence of AIDS. Brazil doesn't want to pay for a commodity that belongs to someone else. In this case it's Abbott's Kaletra, one of the most potent AIDS drugs.
If Brazil carries out its threat, the U.S. has a number of retaliatory options, including a complaint to the World Trade Organization or the imposition of its own economic sanctions. Washington should not hesitate to use them.
At stake is the integrity of patents and copyrights, the protection of intellectual property. Without those protections, poachers can appropriate the fruits of someone else's research at will. Pharmaceutical firms will be less likely to spend hundreds of millions of dollars on research on a cure or a vaccine for AIDS if they can be ripped off with impunity by foreign nations.
Kaletra is the most potent member of a family of drugs called protease inhibitors, which are used to treat people infected with HIV/AIDS. Abbott researchers spent more than five years developing Kaletra, which went on the market in 2000. The company holds the patent until 2015.
Kaletra is expensive. In the U.S. the annual, per-patient cost is $7,183, in addition to other treatments.
Abbott, though, has negotiated several price breaks with Brazil which have brought the price of Kaletra to $2,562 a year, or less than half the going rate in developed countries. In Africa, Abbott sells the drug for about $500 a year, which means the pharmaceutical firm takes a substantial loss. That's considered part of the company's $100 million, five-year commitment to fight the AIDS epidemic in the developing world.
International conventions allow poor countries to declare a national emergency and use something called compulsory licensing to clone cheaper versions of patented drugs. The Brazilian Congress has invoked the compulsory license protocol to try to force Abbott to lower the price of Kaletra in Brazil to about $1,400 a year.
. According to Flavio Marega, trade counselor with the Brazilian Embassy in Washington, $1,400 is what it would cost Brazil to treat patients with HIV/AIDS if it produced its own generic Kaletra. He says that Brazil's widely regarded program to provide full treatment for anyone with HIV/AIDS costs the nation about $260 million a year, a cost the nation will soon not be able to afford.
Brazil's claim for compulsory licensing, though, is bogus. The country is sufficiently developed and the incidence of AIDS there is relatively low--approximately .7 percent among adults, or only slightly higher than in the U.S.
Compare those numbers with sub-Saharan Africa: In Swaziland, AIDS incidence is nearly 40 percent among adults, in Lesotho 30 percent.
Brazil's endgame is unclear. Humberto Costa, the minister of health, has said the country's generic Kaletra will be for domestic use only. But in other forums he has cited the need "to develop our own manufacturing industry" and encouraged other developing countries to follow Brazil's patent-busting lead.
No matter how you package it, Brazil's campaign against patents held by U.S. pharmaceutical firms amounts to international thievery and extortion. It threatens to disrupt, not enhance, the worldwide treatment of AIDS. That doesn't bode well for international trade, scientific research or the prospect of breakthroughs in the treatment of AIDS.
To Press Against Breaking the Patent
To Roche's President, to disrespect patents may help at the time prices are negotiated, however the country may pay a high price for this
Less than one month after the Fuzeon launching in Brazil, one of the most modern drugs against Aids ever produced before, Roche would have reasons to celebrate if the Brazilian government had not made the unprecedented decision last week. Brazil surprised the world by announcing, for the first time in history, that a drug used for the treatment of the HIV positive people would be broken. The Lula government made the Kaletra, made by Abbott Laboratory, a drug of public interest and the decision will only be reversed in case the American laboratory reduce its prices in the next days. "We understand that the threat to break the patent is a way to negotiate prices, however Brazil may pay a high cost for this.", said the Swiss Ernest Egli, President at Roche for Brazil and Latin America. To him, the government threatens one laboratory, but the news is ready by 50 multinational companies that will think twice before invest on the country.
EPOCA - Roche has just launched in the country the Fuzeon, one of the most complex anti -HIV drug. Will Roche's plans be changed after the breaking of patents in Brazil?
Ernest Egli - We trust in a solution that will be reached by the government and the laboratories other than breaking patents. Up to this moment, our plans are unchanged.
EPOCA - Which is the impact this decision has on Brazil?
Egli- The repercussion is very negative for a country that is the 15ª largest economy in the world and certainly wishes to be a First World. The developed countries do respect the intellectual property. The patents make possible the pharmaceutical industry to produce innovative drugs.
EPOCA - But the majority of the public opinion support breaking patents and considers the Brazilian program to fight against Aids as an example. How the pharmaceutical industry will cope with this dilemma?
Egli- The industry takes on average 10 years and spends approximately US$ 800 million to develop a complex drug. Without patents, the laboratories have will not be able to pay the costs. At Roche, for instance, simply 20% of its total sales is invested on research. If you consider that the drugs represent approximately 10% of the total spent with health, to break patents will be a partial solution, of low impact. In the Brazilian case, it would be much more interesting to create incentives for the private industry to cooperate with the universities and invest on technological states that may compete internationally.
EPOCA - Breaking patents is never justifiable?
Egli - In some cases yes. In Africa, the drugs for Aids from Roche are not patented. We cannot compare Brazil with the Sub-Saharan Africa countries, where 60% of the Aids patients in the world live and where almost half of the population lives with less than US$ 1 per day. There, the economy is stagnant and the rate of human development fell down in the last decade. We do not ignore the Brazilian difficulties, but the situation is different.
EPOCA -What does "not to ignore the Brazilian difficulties" mean?
Egli- Besides we donate the drugs of the Aids cocktail for the Ministry of health, we often give discounts to the government. One of our drugs, the Viracept, has accumulated 72,6% of reduction in price since it was launched, in 1998. However, in drugstores, to the final consumer, we have a price policy that is similar in all over the world. If our product here is much cheaper, we encourage the illegal exportation, because the patient in Europe will want to pay the same price paid by the Brazilian. He will buy here and deliver there.
EPOCA - Breaking patents will frighten the foreign investments in the country?
Egli - In fact, the simple threat to break patents has already made difficult the investments on Brazil in the last four years, because to keep threatening all the time is as bad as to really break the patent. We understand that this is used to negotiate and reduce prices, but this tool costs too much to the country. The government threatens one or three laboratories, but the news is read by 50 multinational companies and every one will think twice before investing on the country. Today, Mexico is the major competitor Brazil has because it respects patents and has a relative price rate. Brazil still has to define what it wants. If they want to be a country of generics or, I insist, if they want to be a first world country. This means to be flexible in terms of prices and accept patents. Everyone thinks twice before investing here again. Since 1999, with the real devaluation and the severe prices control by the government, we have never recovered our margins.
EPOCA - Don't you think that the pharmaceutical industry is too much powerful for not being controlled?
Egli- When the subject is pharmaceutical industry, the only drugs commented are the ones against impotence or cholesterol, which sell billions. No one comment about the risks and costs of our business. From each ten drugs that are launched, only two reaches the financial balance compatible to its cost of investment. The other eight are launched for specific diseases and don't recover the investments made. In the last 15 years, the pharmaceutical industry is the one that has more activity in merger and acquisitions. This shows that the laboratories are not as powerful as they say. It is becoming more and more difficulty to finance a research, whose return on investment will happen in ten years only. I have a list of about 30 laboratories that simply disappeared in the last years.
Drug Access | AIDS Advocates, Property-Rights Advocates Disagree Over Brazil's
Threat To Break Antiretroviral Patents
Henry J. Kaiser Family Foundation
Although many AIDS advocates and humanitarian groups are praising the Brazilian government for its announcement last month that it will break Abbott Laboratories' patent on the antiretroviral drug Kaletra on Thursday unless the company lowers the drug's price 42% to $1.17 per pill, property-rights advocates and the pharmaceutical industry are saying the move is "government-sanctioned piracy" of intellectual property, the AP/Washington Times reports (Clendenning, AP/Washington Times, 7/4). Brazilian Health Minister Humberto Costa on June 24 informed Abbott of its ultimatum regarding Kaletra, saying that under the World Trade Organization's intellectual property agreement, governments can approve the domestic production of generic versions of patented drugs during emergency public health situations if they fail to reach an agreement with the patent holder. Costa has said it would take about one year for Brazil to establish facilities to produce and test a generic version of Kaletra for efficacy and safety, and Brazil also is negotiating price reductions for Merck's efavirenz and Gilead's tenofovir (Kaiser Daily HIV/AID S Report, 6/28).
AIDS advocates say that WTO instituted the intellectual property exceptions to allow governments to make the types of decisions Brazil is making on Kaletra, and they are hoping that other countries such as India and China will follow Brazil's lead in threatening to break patents. Advocates also hope Brazil will take steps to export generic antiretrovirals to other developing countries. "We are the hostages of these companies, and compulsory licensing is a defense against the abuse of monopolies," Jorge Beloqui, head of an AIDS support group based in Sao Paulo, Brazil, said. However, critics say the Brazilian government is using sympathy for HIV-positive people to rob profits from pharmaceutical companies. Eric Noehrenberg, director of international trade and market for the International Federation of Pharmaceutical Manufacturers & Associations, said many pharmaceutical companies that have invested heavily in Brazil might consider pulling out of the country if it breaks Abbott's patent on Kaletra. "Companies are looking very hard at their presence in Brazil in light of these circumstances," Noehrenberg said (AP/Washington Times, 7/4).
U.S. Business Group Urges Brazil To Drop Ultimatum
The U.S. Chamber of Commerce, an organization representing more than three million businesses worldwide, is urging the Brazilian government to drop its threat to break the patent on Kaletra, The Hill reports (Rodeffer, The Hill, 7/6). "Brazil's threat to strip patent rights from a U.S. company should concern all investors and every business around the world because of the precedent it sets for the treatment of intellectual property," Chamber President and CEO Thomas Donohue said, adding, "While we share the Brazilian government's concern for the well-being of its citizens suffering from this terrible disease! , the way to deal with this situation is through dialogue and partnership, not through threats. U.S. companies have always been willing to explore different possibilities with the government of Brazil to provide support to the national AIDS program" (Chamber release, 7/1).
There will be no shortage of drug
INTERVIEW // Jarbas Barbosa
The Secretary for Health Surveillance of the Ministry of Health, Jarbas Barbosa, is not ruling out the possibility of Brazil to produce Kaletra, but changed his tone on talking about the patent. Barbosa recognizes that it would be more interesting if the Laboratory Abbott reduced the price.
CORREIO BRAZILIESE - Abbott Laboratory indirectly Said that Farmanguinhos has no technological capacity to produce Kaletra.
JARBAS BARBOSA - I will not talk by 'thinkmeter'. After we get the compulsory license, we can authorize more than one laboratory to produce Kaletra. Farmanguinhos would not produce the drug if it did not have capacity.
CORREIO - The laboratory's choice to produce the drug should be through a bid, shouldn't it?
BARBOSA - There is no need, it is just one act from the Minister by issuing the compulsory license and another to choose the laboratory. Right after that, the government signs an agreement with a national laboratory and starts the drug production.
CORREIO - While Kaletra is not produced, from who the patients will receive the drug?
BARBOSA - From government. When our stocks are over, if we do not come into an agreement with Abbott, we will open a new bid. The laboratory itself may take part of this bid.
CORREIO - Is Abbott the only laboratory to produce Kaletra?
BARBOSA - No. Abbott is the patent's owner, but there are generic versions for Kaletra in the market for US$ 0,78.
CORREIO - The why doesn't the government buy the much cheaper generic version?
- We cannot purchase because we have a valid contract with Abbott. But, next year our next bid we will be able to buy generic versions from India, China, who else produces it.
CORREIO - There are rumors that Abbott will appeal in case of the government issues the compulsory license by arguing that Brazil has funds to purchase Kaletra.
- We are prepared to appeal from this argument, which absolutely false. We are the bigger Kaletra purchaser in the world. The laboratory is charging us twice as much of the value the generic version is charged in the market. Besides that, we are not negotiating savings. Our major concern is to keep the Aids Treatment Program going on.
Waste of drugs
Mário Scheffer, from the Aids Movement, criticizes the wast of drugs
More than R$ 16 million in expired drugs make full the drug stocks at the Ministry of Health in Brasilia. A survey made by the own government, in June, indicates that in the shelves are 69 lots of 18 types of different drugs, used above all for the treatment of Aids patients and diseases alike. Among the drugs, whose destination now is the garbage, is the combination ritonavir/lopinavir, exactly the formula of Kaletra, from Abbott laboratory, declared by the government of a drug of public interest two weeks ago. Besides the combined drug, the Ministry collects expired lots of capsules with only lopinavir or ritonavir. There is also a stock of indinavir, used in the Aids treatment.
From the drugs that were kept, 59 lots expired during this government - from 2003 to 2005, but there are also other drugs that expired more time ago. Four lots, for example, should have been used until June 1999. "This is for sure a demonstration of incompetence", Said the participant of the Aids movement Mário Scheffer. He argues that in the last years the treatment of the disease has got a profile extremely predictable: either the number of patients or the required drugs. "There is no justification for too much loss", he said.
This is not the first time that the Ministry gives evidences of not control the Schedule of purchases and drugs distribution to the HIV positive people. In the beginning of the year, the Ministry faced a crisis ever seen of shortage for the antiretroviral drugs. In the beginning, they Said that the problem was a delay in the raw material supplying for the drug's production, however as time went by, it was found that the shortage was associated with other problems: delay in place the order to the supplier and delay in transfer the funds to official laboratories.
The Ministry, however, denies that they have not managed well the stocks control. They blame in part the former government to wrongly calculate their purchases. They say that the orders were not compatible with the country's requirements. The government mentions as an example the purchase of saquinavir, in 2001, by an amount of R$ 7 6 million. Knowing that the drug would expire between May and October, the Ministry tried a negotiation with the manufacturer Roche. They didn't come to an agreement.
Other purchase has caused a lawsuit: the purchase of indinavir, by an amount of R$ 3,9 million. The ministry tried to suspend it in the beginning of 2003. The laboratory Laob didn't accept the proposal and sued the government. The government was force to buy the drug.
In the case of lopiniavir and ritonvavir, the reason for the loss is different. According to the government, the drug lost in the stocks was pediatric and less used. The lot had been donated by the laboratory and there wasn't time enough to use the drug. The ritonavir loss, says the Ministry, was caused because the drug was donated in lots close to expire - the donations were made by Abbott and Cristalia in the amount of R$ 1 million.
of reais is the global value for the lot of expired drugs found in the Ministry of Health
Drugs body says Brazil to lose from AIDS patent move
The global pharmaceutical industry body IFPMA warned on Wednesday that Brazil's decision to break a U.S.-held AIDS drug patent would turn foreign firms against cooperating with the country's health programmes.
In a statement on the long-mooted Brazilian move, expected to go into force later on Wednesday, Director-General Harvey Bale also suggested that the action amounted to theft.
Brazil's Health Minister Humberto Costa said last week that his ministry was issuing a compulsory licence order for the Kaletra anti-retroviral (ARV) drug on the Sao Paulo office of Illinois-based Abbott Laboratories Inc .
"Issuing a compulsory licence will not help patients," said Bale, a former U.S. trade negotiator whose International Federation of Pharmaceutical Manufacturers and Associations is based in Geneva.
"Companies are already providing their products in Brazil at dramatically reduced prices. A compulsory licence order would send a strong signal to companies that Brazil does not welcome cooperation with pharmaceutical companies to address Brazil's public health needs."
Costa told reporters in Geneva on June 27 that the Brazilian government was taking the action to slash the cost to its health budget of providing the drug free of charge to tens of thousands of AIDS sufferers.
He said Abbott had refused to negotiate a voluntary licence, under which a Brazilian state-run laboratory would manufacture the drug and pay the company the actual cost of production.
Under the compulsory licence, the first-ever issued by Brazil in a long-running battle over pricing between several developing countries and multinational companies, the price would be slashed from $1.17 a pill to 68 cents.
But Bale said that despite Brazil's claims that the move was necessary to limit health spending, it was spending less on AIDS medicines than it did five years ago, while heavily subsidising local producers of drugs to treat the virus.
The compulsory licence move was, he declared, "more an act of trade policy, promoting the interests of local manufacturers, than a health policy measure".
The IFPMA director-general quoted former Brazilian President Henrique Felipe Cordoso as once saying that no country became rich through stealing the property of other nations. "No country will become healthy via theft, either," Bale declared.
The Brazilian move has also been criticised by Abbott and the U.S. industry body PhRMA as likely to hit at research on new drugs, but there has been no formal statement from the U.S. administration of President George W. Bush.
One U.S. trade official said last week that Washington was monitoring the situation and was in touch with both the Brazilian government and the industry.