Important note: Information in this article was accurate in 2007. The state of the art may have changed since the publication date.
Associated Press - April 25, 2007
Vivian Sequera
Health Minister Jose Gomes Temporao signed a decree declaring Merck (nyse: MRK - news - people )'s efavirenz anti-retroviral drug a "public interest" medicine - the first step in a process that could lead Brazil to break Merck's patent.
"Brazil is not doing this as a threat, nor to lower the price of other medicines, but to guarantee its program of attending (AIDS) patients," Temporao said at news conference.
Whitehouse Station, New Jersey-based Merck now has seven days to negotiate lower prices with the government, Temporao said. If the two sides do not reach a deal, Brazil could issue a compulsory license that would allow the country to produce or buy a generic version of the drug, paying Merck only a small royalty.
Merck said it was committed to reaching a negotiated agreement with the Health Ministry.
"The company does not believe compulsory licensing is in the best interest of patients," spokeswoman Amy Rose said.
Brazilian law and rules established under the World Trade Organization allow for the issuance of compulsory licenses in cases of a health emergency or if the pharmaceutical industry is deemed to be engaged in abusive pricing.
Efavirenz is the most widely used medication by Brazil's anti-AIDS program, which provides free medicines for anyone who needs them.
Currently 75,000 of the 180,000 Brazilians with HIV who receive the free cocktail of anti-AIDS drug, use efavirenz. When Brazil began buying efavirenz in 1999, only 2,500 patients used the drug.
In 2005, Brazil threatened to break the patent on Kaletra, an anti-AIDS drug produced by Abbott Laboratories (nyse: ABT - news - people ) Inc., but the two sides reached an agreement and the company's patent was not broken.
In November, Brazil began price-reduction negotiations with Merck, demanding the same 65 cents per 600 milligram pill of efavirenz the company charges the Thai government. Brazil at the time was paying $1.59 per pill, the statement said.
Merck proposed a 2 percent reduction, which the government turned down.
Brazil has repeatedly managed to win price reductions in recent years from big pharmaceutical companies by threatening to break patents but has never actually done so.
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