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US Monitoring Brazil Plan to Break AIDS Drug Patent
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Filed at 6:20 p.m. ET
Below are three articles on this story from the NY Times, Wall St Jnl, and the original announcement from Brazil.
WASHINGTON (Reuters) - The United States is keenly following Brazil's plan to break a patent held by a U.S. drug company to cut treatment costs for the country's tens of thousands of AIDS sufferers, a U.S. official said on Tuesday.
``We are monitoring this latest development closely through our embassy in Brasilia and here in Washington,'' a U.S. trade official said, without commenting on whether the United States would challenge Brazil on the issue.
``We will maintain our communication with the government of Brazil and our industry. The U.S. has been a leader, not only in developing innovative drugs, but also in making sure countries have the tools within the rules to combat health crises,'' the official added, speaking on condition he not be identified.
Brazil has announced it will break a patent on Abbott Laboratories Inc.'s anti-retroviral drug Kaletra to provide a cheaper generic version for its treatment program.
It would be the first time any country has broken a patent in order to produce an anti-AIDS drugs. Brazil says its state-owned lab could make the drug for 68 cents a pill, less than the $1.17 each the government pays Abbott.
At a news conference in Geneva on Monday, Brazilian Health Minister Humberto Costa argued the move was ``totally legal'' under World Trade Organization rules.
Brazil was taking the step after Abbott had refused to grant a voluntary license to manufacture Kaletra, Costa said.
The order, the first issued by Brazil in a long-running tussle over pricing between developing countries and multinational companies producing drugs used in AIDS treatment, will go into effect within 10 days, Costa said.
Kaletra is one of three ARVs made by Abbott and two other U.S. firms on which Brazil will this year spend $250 million, 63 percent of its AIDS budget, to treat some 180,000 sufferers.
WTO rules give member countries discretion to protect public health by issuing compulsory licenses allowing the manufacturing of patented drugs.
Mark Grayson, a spokesman for the Pharmaceutical Research and Manufacturers of America, questioned whether Brazil faced an emergency that justified breaking the patent.
Statistics show its spending on AIDS drugs has declined over the past five years, he said.
``As a policy matter, threatening to break patents doesn't solve the AIDS problem,'' Grayson said.
Brazil Mulls Drug Patent Theft as an AIDS Antidote
Wall Street Journal
By MARY ANASTASIA O'GRADY
June 24, 2005; Page A13
When the Bush administration offered Brazil $40 million for its anti-AIDS program earlier this year, Brasilia turned it down on principle. The terms of the deal required the government to condemn the sexual exploitation of women -- otherwise known as prostitution. Calling the U.S. demand "theological, fundamentalist and Shiite," Brazil rejected the offer.
Turning down a $40 million contribution seems like a luxury that a developing country with an estimated HIV-infected population of 600,000 couldn't afford. But as it happens, Brazil has a back-up plan. It is moving to force foreign drug makers to surrender their patents on anti-AIDS drugs at a price dictated by Brasilia, a tiny fraction of the medicine's value.
Brazil's lower house passed legislation abridging AIDS drug patent rights earlier this month. The bill specifically names drugs produced by Abbott Laboratories, Gilead Science and Merck. It is not clear whether the Senate will pass the law or Brazilian President Luiz Inácio "Lula" da Silva will uphold it or exercise his veto. But steamrolling the rights of patent holders is something that Brazil has been threatening since 2001.
The possible compulsory licensing of AIDS drugs is only part of Brazil's wider assault on intellectual property rights. While China and India are promising to firm up protections and sucking in capital investment, Brazil seems bent on joining the likes of Cuba, Iran and Venezuela in cutting its own throat by destroying those rights.
The effort pits the short-run benefits of grabbing at little cost today's best medicines -- claiming "humanitarian" motives -- against the long-run damage to research and development that weakened property rights are sure to inflict. Such policy positions could devastate Brazil's stated hopes of attracting a thriving biotech industry.
Brazil posits that the WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) allows it to go after patents in a public health "crisis."
Yet more than half the drugs Brazil distributes through its anti-HIV/AIDS program can be copied legally. As to cutting-edge medicines that still have patent protection, Brazil receives sharp discounts from pharmaceutical companies, which try to recoup their research and development costs in wealthier countries like the U.S. To be sure, Brazil is not as rich as the U.S., but it's not among the poorest either, as evidenced by its space program and thriving aircraft industry.
One example of drug company generosity is the deal Merck has given Brazil on its anti-retroviral drug Stocrin. According to Grey Warner, senior vice president for Latin America Human Health at the company, "Stocrin is sold to Brazil at the lowest price in the world outside of the least developed countries, such as sub-Saharan Africa, where we supply the product at no profit. In practical terms, this equates to a price that is about 90% lower than in the U.S., Canada and Western Europe." That seems like rather generous treatment of a large country well advanced toward industrialization.
Meanwhile, at the strategically critical World Intellectual Property Organization (WIPO) in Geneva, Brazil is leading the charge to weaken intellectual property rights within the World Trade Organization. This week, a second session on "a development agenda" for the WIPO was underway. This meeting is a follow-up to the April WIPO session in which the "Group of Friends of Development," led by Brazil, spelled out its objection to intellectual property rights as traditionally defined. The 14 countries in this euphemistically titled alliance include such paragons of sound economic development policy as Iran, Cuba, Argentina, Bolivia, Ecuador, Peru, Venezuela and Sierra Leone.
In its April document the group stated that it wants to examine the implications of intellectual property rights protection, "rather than seek to approach this highly controversial issue as if it were governed by absolute truths, loosely under the one dimensional perspective of the private rights holders, ignoring the broader public interest."
That's clearly code language for socializing property rights, a view that has dominated Brazilian thought over most of the 20th century and produced the current squalor that so many Brazilians live in. Few people want to invest in a country where legalized theft is government policy.
Another egregious attempt to destroy intellectual property rights is the effort by a group of developing nations -- again led by Brazil -- to include a bizarre amendment to the 1992 United Nations Convention on Biodiversity, which has been ratified by 188 countries, ostensibly to protect nations' biological resources. The change would give nations the ability to sue for patent rights to a successful biotechnical innovation if they could prove that a plant molecule, animal molecule or some "traditional knowledge" originating in their country was used in the development of the product.
According to Timothy Wolfe and Ben Zycher, who studied the law for the Pacific Research Institute, this would be "analytically equivalent to a long-run tax on biotechnological and pharmaceutical research and development investment." Their PRI study estimates the effects of such a tax on 27 countries including Brazil, Mexico, Peru and Colombia. By the year 2025, the law "would reduce the biotechnological and pharmaceutical research and development capital stock by about $144 billion (in year 2004 dollars), or almost 27 percent, for the 27 nations," Messrs. Wolfe and Zycher write. "This implies a loss of 150-200 new drugs."
As Mr. Zycher points out this is similar to price controls, which have of course wreaked havoc in economies wherever they have been applied. "You can erode property rights in the short term without much effect, but the long-run effects are far more serious," he said.
Brazil's actions, ostensibly designed to help people with a terrible disease, will retard economic development and handicap all efforts to improve human health standards. Ailing AIDS patients will need new pharmaceutical developments as the virus mutates and becomes resistant to today's wonder drugs. But what company will volunteer to produce drugs that politicians demand free of charge? Job-seeking Brazilians who would benefit from foreign investment in biotech will have to move to India. Brazil will sink ever lower into underdevelopment. Maybe soon it will legitimately qualify for the same charity as poverty-stricken sub-Saharan Africa.
Brazil Issues
AIDS-Drug Ultimatum
Generic Production to Begin
If Abbott Won't Lower Price;
Bristol's African Initiative
By MATT MOFFETT and HEATHER WON TESORIERO
Staff Reporters of THE WALL STREET JOURNAL
June 27, 2005
Amid growing friction between Brazil and the U.S. over trade and AIDS policy, Brazil said Friday it was giving Abbott Laboratories 10 days to lower its price for the AIDS drug Kaletra. If Abbott refuses, Brazil said it would authorize a state-run laboratory to produce a version of Kaletra for a price 58% that charged by Abbott.
Brazil said its action would be based on national and international trade legislation allowing the issuance of compulsory licenses for drug production in emergencies or as a matter of public interest.
Abbott strongly contested the Brazilian ultimatum. "A compulsory license is not in the best interest of Brazilian patients because it puts the government's desire to cut health-care spending ahead of patients' need for new and better treatments," the Abbott Park, Ill., company said. "The discovery and development of innovative new treatments depends on the reasonable return on investment for existing treatments."
Abbott noted that it was already selling Kaletra to Brazil at a lower price than anywhere outside of Africa and other less-developed countries participating in a humanitarian-access program.
Kaletra had $896 million in world-wide sales last year, making it Abbott's third-biggest drug.
In recent years, Brazil has threatened several times to break AIDS drug patents in order to obtain lower prices. But the dispute with Abbott is the most serious standoff to date. Brazil said that almost one-third of the $394 million it has budgeted for antiretroviral drugs this year will be used to purchase Kaletra. While the price the government pays for Kaletra has come down to $1.17 per pill from $1.60 in 2002, Brazilian Health Minister Humberto Costa said Brazil can manufacture the drug for 68 cents, saving $54 million a year.
Brazilian AIDS activists said the country urgently needs to lower drug prices, as the number of people receiving free AIDS drugs is projected to increase to 215,000 in 2008 from 170,000 currently. "We don't have anything against the drug companies, but with thousands of new drug recipients every year, this is a question of survival," says Roberto Pereira, coordinator of the Center for Sexual Education, an AIDS awareness group in Rio de Janeiro.
Brazil said it is continuing negotiations with Gilead Sciences Inc. and Merck & Co. that are aimed at reducing prices on the AIDS drugs they produce.
Separately, Bristol-Myers Squibb Co. and Baylor College of Medicine will send as many as 250 pediatricians from around the world to Africa over the next five years to help care for the burgeoning population of children with AIDS, the organizations plan to announce today. Bristol-Myers, of New York, and Baylor, of Houston, also plan to build four children's HIV/AIDS treatment centers. The drug maker is also set to announce price reductions to its pediatric HIV medicines in some of the least-developed countries.
Pediatricians in the program will commit to one- or two-year stints in the centers and get relief of as much as $40,000 a year in school loans, plus living expenses. The program is meant as an interim measure until there are more Africans trained to provide pediatric HIV/AIDS care, and the corps will train medical professionals as part of its work. Two of the centers will be built in collaboration with local governments in Kampala, Uganda, and Bobo-Dioulasso, Burkina Faso. The developing-world locations of the other two centers haven't been chosen.
According to Unicef, last year about 640,000 children under age 15 became infected with HIV, and about 510,000 children died of AIDS. Since 1999, Bristol-Myers has awarded $120 million in grants for pediatric AIDS work. As part of the latest efforts, it's committing an additional $30 million, and Baylor is donating $10 million.
---- Leila Abboud and Marilyn Chase contributed to this article
Brazil National AIDS Program & Kaletra
BRASILIA, Brazil, June 24 /PRNewswire/ -- The Ministry of Health of Brazil has declared the anti-retroviral drug Kaletra (Lopinavir/ritonavir), manufactured by Abbott Laboratories, to be of public interest. As such, the Brazilian government will adopt obligatory licensing of the medication, in the case that the manufacturer does not provide the necessary requirements to guarantee the sustainability of the National STD/AIDS Program. An official notice sent this Friday to the Laboratory opens the door for the company to express its opinion on whether it will address this situation in the public's interest.
The Laboratory will have 10 days from receipt of this notice to inform the Brazilian Ministry of Health that it is prepared to reduce the sales price of Kaletra to national production levels. Its agreement will prevent the adoption of obligatory licensing.
With the licensing, the government will be able to allow Farmanguinhos Laboratory, from Fiocruz, to produce the medicine for exclusive public, and not commercial, use. This measure is necessary to maintain the sustainability and the quality of the National STD/AIDS Program, which is responsible for guaranteeing life for close to 170,000 Brazilians this year.
With the declaration of public interest, the Brazilian government is applying the flexibility laid out in international norms and Brazilian legislation, without breaking a contract. The Ministry of Health is basing its adoption of the licensing on the TRIPs Accords (Trade-Related Aspects of Intellectual Property Rights), the Doha Declaration, and Patent Law (1997) and Decree 4.830/03.
The Brazilian National STD/AIDS Program is a worldwide benchmark for treatment of HIV carriers and has as its goals the universal and free access to all resources available for the treatment of the disease, and for prevention and diagnosis at public hospitals.
The number of patients using anti-retrovirals in Brazil has risen from nearly 36,000 in 1997 to 170,000. Between 2004 and 2005, more than 20,000 people participated in the Program. There are 15 types of anti-retroviral medications that distributed free of charge. Kaletra was introduced in 2002 and is prescribed for patients who have already developed resistance to other medications.
To guarantee the use of the latest generation anti-retrovirals on all people, the Ministry of Health has increased by 50% the resources dedicated to the program, which started in 2004 at R$620.9 million, and in 2005 were increased to R$945 million (US$393.9 million). Of this sum, almost one third (R$257 million) will be used solely for the acquisition of Kaletra.
The projection is that in 2008, close to 215,000 people in Brazil will need the cocktail, which means a budget of R$1.25 million (US$520.8 billion), with one third of this amount being earmarked for the purchase of Kaletra.
Investment increases to maintain the National STD/AIDS Program have been constant. But in the last four years, Brazil has increased investments by 77%, while the number of patients has gone up by 43%.
It is estimated that 600,000 Brazilians carry the HIV virus. There are even more who do not know that they are infected, and will need to be treated in the upcoming years. "Brazil is concerned about doing a good job of treating those Brazilians who need it, with the proper medication, and with updated treatment measures. It is a matter of public interest," explains Minister Humberto Costa.
To guarantee delivery of the ideal medicine to each one of the carriers registered in the program, the Ministry of Health must acquire the latest generation medications. Beginning to be distributed, for example, is Enfuvirtida, which belongs to a new class of anti-retrovirals, at a cost of R$19,000/month (US$7,900 per patient). A total of 1,200 patients are currently signed up to be treated with this new medication.
Negotiation - In March of this year, the Ministry began negotiations for voluntary licensing with Abbott Laboratories, Gilead Science Incorporation, and Merck Sharp & Dohme. The medications produced by these laboratories - Kaletra, Efavirenz (Merck) and Tenofovir (Gilead) - make up 66% of the entire budget for the purchase of anti-retrovirals.
Negotiations with Merck and Gilead continue. Abbott was the only one to oppose both the alternative voluntary licensing as well as a price reduction which guarantees the future sustainability of the program. Since the medication arrived in Brazil in 2002, its price has been reduced by 25%--a percentage that is considered to be low in global terms--because development costs diminish over the years.
Today, the unit price of Kaletra is US$1.17 in contrast to its price of US$1.60 in 2002, and US$0.72 for its generic version. However, in this period, the government costs for the purchase of the medication have gone up from US$35.2 million to $91.6 million annually. This is due to the fact that the number of patients who need the medication in Brazil has increased threefold per year. In 2002, there were 3,200 people who needed it. This year, there will be 23,400.
Legislation - The Ministry of Health's initiative is backed by national and international norms and respects the rights of private companies to make a profit from their inventions. Article 71 of Brazilian patent law (Law 9.279/96) provides for obligatory licensing in the case of public interest. Decrees 3201 of 1999, and 4830 of 2003, also consider those items related to public health to be of public interest.
The Doha Declaration (Catar) in 2001 allows countries to take measures to protect public health. Those measures, according to the Declaration, do not compromise the TRIPs Agreement, which established minimum rights over intellectual property.
Should Abbott Laboratories not follow the Ministry's notice, the medication will be produced in Brazil exclusively for national consumption. Although the obligatory licensing gives Brazilian laboratories the right to produce Liponavir/ritonavir, it does not prevent Abbott from commercializing Kaletra in the country.
National production - With the obligatory licensing, the Institute of Pharmaceutical Technology (Farmanguinhos Laboratory), of the Oswaldo Cruz Foundation would produce the Lopinavir/ritonavir medication while reducing by the current price by almost 50%. Within one year, Farmaguinhos would be able to produce six million capsules/month, the necessary amount to meet domestic demand. The unit price for the medication should be around US$0.68, which would add up to approximately R$130 million/year for the National Program.
Farmaguinhos is the largest official laboratory in Brazil and already produces more than 60 medicines, among them anti-virals. Last year, the Brazilian government invested US$6 million in the acquisition of the GlaxoSmithKline industrial park in Rio de Janeiro in order to convert it into the Medicine Technology Complex (CTM) for Farmaguinhos. The CTM will produce 10 billion pharmaceutical units in 2007.
The Program - Since 1986, the National STD/AIDS Program has guaranteed 100% free treatments to those with HIV/AIDS. Since the program started, the life expectancy of persons with AIDS has increased twelve-fold, from five months to 58 months. Mortality has dropped 50% and the number of pregnant women suffering from the disease who have access to AZT, which helps prevent infection of the newborn, is on the rise. This year, the Ministry of Health will finance 754 disease-fighting projects run by NGOs with a budget of R$60 million.
In 2001, UNESCO (United Nations Educational, Scientific, and Cultural Organization) presented an award to the Brazilian program in the category of Human Rights and Culture of Peace. Last year, the quality of the Brazilian AIDS Program received one more international award: a medal from the U.N. AIDS Program (Unaids) for the leadership that Brazil has exerted in improving the fight against the epidemic.
Brazil has participated in an international HIV and AIDS cooperation program since 1995. Today, 25 countries are involved in that work, which includes prevention, assistance and treatment, epidemiological monitoring, project management, sexually transmitted diseases, human rights, and cooperation with private sector organizations.
SOURCE Ministry of Health of Brazil
06/24/2005 21:40 ET
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