Inter Press Service - August 23, 2001
Mario Osava

It is the first time this South American country has made such a move, but it was necessary, says Health minister Jos Serra, because of the "insufficient" reduction Roche offered on the price of the AIDS drug following months of negotiations, in contrast to the flexibility shown by another transnational laboratory, Merck Sharp & Dohme.

Nelfinavir is one of the 12 that the Brazilian government distributes free to some 100,000 HIV/AIDS patients through an internationally applauded programme that has cut the country's AIDS mortality rate by more than half.

Of the more than 300 million dollars the Health Ministry spends on the programme each year, at least a quarter goes toward imports of Nelfinavir, Serra said during a radio interview Thursday.

This disproportionate outlay for just one drug has only grown worse with the devaluation of Brazil's currency, the real, which has fallen more than 25 percent so far this year. The weak real has made imports more costly across the board.

Merck, which produces two of the 12 medications used in the anti-retroviral "cocktails" Brazil provides its AIDS patients, agreed to slash its prices by nearly 70 percent. But Roche offered a discount of just 30 percent, said the minister, refuting information from the transnational that it had proposed a 35- percent price cut.

"There were months-long negotiations, but the company did not attend the last two meetings the Ministry requested," which was interpreted as a lack of interest in continuing dialogue, said Serra.

The Health Ministry's move will allow Brazil-based pharmaceutical laboratories, like Farmanguinhos, to produce Nelfinavir. But it but does not overrule the royalties that will be owed Roche, sums the local labs will indeed pay the Swiss transnational, say officials here.

With production of the drug at home, the government AIDS- fighting programme would save 40 percent of its Nelfinavir budget, or 35 million dollars annually, according to government figures.

The aim is to reduce the costs of the anti-retroviral drugs that are essential for treating people who have HIV/AIDS, said Serra in his justification of the government measure.

He stressed that Brazil is still open to negotiating with Roche if the firm is willing "to meet our requirements, but we will not wait any longer. We are starting production."

Roche expressed its surprise at the move in a Thursday press release, pointing out that negotiations had been "on good terms" and that it "already conceded discounts close to those that the ministry is requesting."

Furthermore, says the pharmaceutical company, there was no previous consultation, as required by an accord reached in July by Brazil and the United States when Washington withdrew the complaint filed with the World Trade Organisation (WTO) against a Brazilian law that allows compulsory licensing of patents in situations of "national health emergencies."

The minister asserted that Brazil could not tolerate further delays in the talks because the country needs to begin local production of the drug in January 2002 as its contract for purchasing Nelfinavir from Roche ends this December.

Because Roche is a Swiss company, its patent is not necessarily covered by Brazil's agreement with the United States, though the firm contends that Nelfinavir has a US patent.

Brazil's 1997 intellectual property law authorises temporary compulsory licensing in cases of emergency or of abuse of economic power by the companies holding the patent rights. As a result of the legislation, Brazil came under fire from the United States and from the powerful transnational pharmaceutical industry.

"The Health Ministry's decision has our support," says Carlos Passarelli, project adviser for the non-governmental Brazilian Interdisciplinary Association for AIDS, which lobbies for public policies that benefit HIV/AIDS sufferers.

It is essential to reduce the anti-retroviral treatment costs, Passarelli told IPS, because "it is the Brazilian people who suffer" the impacts of high prices and because the pharmaceutical industry's profits are exorbitant.

The laboratories justify their prices by pointing to their heavy investments in research, but they fail to mention the major contributions they also receive from public funds, he added.

This first-ever application of compulsory licensing in Brazil is also important because soon there will be new disputes with other transnational companies, particularly as new anti-AIDS drugs are developed, commented the health activist.

In addition, it may become necessary to expand the measure to other types of long-term drugs, such as those for treating leprosy or tuberculosis, the costs of which stand in the way of poor patients' access to relief and drive up public health expenditures, Passarelli commented.

Brazil won broad support from non-governmental organisations and international institutions when it faced a battle against the United States at the Geneva-based WTO. If the organisation's Dispute Settlement Body had ruled against Brazil, it could have severely crippled the country's programme for distributing drugs free of charge to Brazilians with HIV/AIDS.
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