AEGiS-WSJ: Abbott Labs Lowers Brazil's Price For AIDS Drug, Ending Standoff

Important note: Information in this article was accurate in 2005. The state of the art may have changed since the publication date.

Abbott Labs Lowers Brazil's Price For AIDS Drug, Ending Standoff

Wall Street Journal - July 11, 2005
Leila Abboud, leila.abboud@wsj.com

Abbott Laboratories said it will lower the price the government of Brazil pays for an important AIDS drug, ending a standoff that started when the country threatened to ignore patents and allow a state-run laboratory to make a generic copy.

The agreement freezes the government's annual expenses for Kaletra for the next six years, although the number of patients taking the drug is expected to increase almost threefold. The government said the accord will allow it to save at least $18 million next year and $259 million over six years. Today, 23,400 Brazilians receive Kaletra under a government AIDS program. That number is expected to reach 60,000 in the next six years.

The Abbott Park, Ill., drug maker didn't disclose the exact terms of the agreement. No per-capsule price was specified; the price of the AIDS drug will depend on the number of patients treated with it.

Brazil is often cited as a model of how to contain the spread of AIDS in the developing world. The government buys AIDS drugs and provides them free to patients.

About two weeks ago, Brazil said it would break the patents on Kaletra, citing national and international trade legislation allowing the issuance of compulsory licenses for drug production in emergencies or as a matter of public interest. Brazil previously has threatened to ignore patents on AIDS drugs to obtain lower prices, but the standoff with Abbott was the most serious to date. The country also is in negotiations with two other manufacturers of HIV medications, Merck & Co. and Gilead Sciences Inc.

Abbott also agreed that after its patents expire in 2015 it would help Brazil begin to manufacture a low-cost generic version. "We were not willing to compromise our intellectual property under any circumstances," said Melissa Brotz, a spokeswoman for Abbott.

Kaletra had $896 million in world-wide sales last year, making it Abbott's third-biggest drug. It is expected to reach sales of $1 billion this year.

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Geraldo Samor contributed to this article.

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