TWN Info Service on Health Issues (May 07/02)

9 May 2007

BRAZIL SANCTIONS COMPULSORY LICENSE ON EFAVIRENZ

The Brazilian President, Luiz Inacio Lula da Silva, on 4 May signed a decree sanctioning the compulsory licensing of the antiretroviral drug Efavirenz. The drug was declared to be of "public interest" in an ordinance issued by the Minister of Health on 24 April 2007. Brazil has stated that its decision is in "absolute compliance with international requirements and with Brazilian legislation."

The patent holder, Merck, was given time in which to make a new proposal on the price it would charge for the drug. Merck offered the drug to Brazil at a 30% discount on the current price of US$1.59 per tablet (i.e. at US$1.11 per tablet) but Brazil MOH reports that it could obtain the product elsewhere for US$0.45 per tablet.

The antiretroviral drug Efavirenz is the most used imported drug in AIDS treatment in Brazil. Currently, 38% of AIDS patients take Efavirenz as part of their treatment scheme. It is estimated that by the end of this year, 75,000 of Brazil's 200,000 AIDS patients will be taking the drug.

At the current prices charged by Merck in Brazil, the annual cost per patient is equivalent to US$ 580, representing budgeted expenditure of US$ 42.9 million for the year 2007. The prices charged for the generic product result in an annual cost per patient that varies between US$ 163.22 and US$166.36. Based on these amounts, under compulsory licensing, expenditure reduction in 2007 will be around US$ 30 million. Savings of US$ 236.8 million are estimated to be made by the year 2012, when the Efavirenz patent expires.

Compulsory licensing is a flexibility provided for by Article 31 of the TRIPS Agreement. This practice is used by developed countries, such as Italy and Canada in relation to pharmaceutical products and also by developing countries. In the case of antiretroviral drugs, Mozambique, Malaysia, Indonesia and Thailand have already made use of this provision to either import generic versions from India or to locally manufacture the products.

News posted on 4/5/2007 on the website of the Brazil National STD and AIDS programme (at www.aids.gov.br) gives the following background on the negotiations with drug companies on other drugs.

"In August 2001, the then Minister of Health, José Serra, requested the compulsory licensing of the Nelfinavir patent (made by Roche). The decision was taken following nine months of negotiations with the laboratory. However, on the same day as the announcement was made, the Minister further announced that the process had been interrupted. This happened because Roche agreed to reduce the price of the drug by 40%."

"In December 2003, Health Minister Humberto Costa announced that compulsory licensing could be adopted for the production of Nelfinavir in Brazil. On that occasion, Humberto Costa explained that he expected to negotiate with Roche, but that compulsory licensing would be decreed if necessary. In January 2004 the Health Minister was successful in obtaining a price reduction for five drugs: Nelfinavir, Lopinavir, Efavirenz, Tenofovir and Atazanavir. The agreement resulted in a 37% reduction in the prices
previously paid for these antiretroviral drugs."

"In June 2005, the President of the Republic, Luiz Inácio Lula da Silva, and the Minister of Health, Humberto Costa, signed a declaration of public interest in relation to the antiretroviral drug Kaletra (Lopinavir + Ritonavir), made by Abbott Laboratories. In July of the same year, the Minister of Health issued a statement on the conclusion of the negotiations with Abbott, which ensured a reduced price for the drug for six years,
access to the new Kaletra formulation (known as Meltrex) and the transfer of the technology for the formulation of Lopinavir + Ritonavir. The laboratory agreed to reduce the unit price of Kaletra capsules from US$ 1.17 to US$ 0.63 each, with effect from March 2006, representing a saving of US$ 339.5 million between 2006 and 2011."

Please find below an Interview with the Brazil Minister of Health JOSÉ GOMES
TEMPORÃO.

Best wishes,

Sangeeta Shashikant & Riaz Tayob
Third World Network
Tel: +41 908 3550
Fax: +41 908 3551
websites: www.twnside.org.sg
and www.ftamalaysia.org

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(Posted on IP Health list serv on 7/5/2007 and translated by Michel Lotrowska (MSF, Brazil)

07/05/20 - FOLHA DE SAO PAULO

LEILA SUWWAN OF BRASILIA FILIAL

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FOLHA - The director of the Chamber of Commerce of the US, Mark Smith, considered Brazil and the Military government (of Thailand) as being equal. What do you think of this declaration?

JOSÉ GOMES TEMPORÃO - It was a "rude" and "out of place" declaration revealing inclusive a profound lack of knowledge in relation to the whole process in which the compulsory license took place. He would need to think about the following question: Which Ministry decides to sell this product 60 % cheaper to a military leaded government than to a strong democracy like the one in Brazil?

FOLHA - He also sustains that the government should not have interrupted the negotiations.

TEMPORÃO - This is not true. In reality, the company showed that it never wanted to negotiate with the Brazilian Government. In seven meetings, the only discount offered was of 2%. After I published the decree of public interest in preparation of the compulsory license, then yes, there was a proposal of 30 % discount. The ministry considered that proposal not satisfactory and answered that we had no more interest in sitting to discuss, but that we were waiting for a serious and consistent answer within
the deadline.

FOLHA - Was the laboratory thinking that the government was bluffing?

TEMPORÃO - Brazil has changed. The government is serious, puts public interest and health above any other question. If the laboratory made that evaluation, it made a huge mistake. From Merck side, there were always very intransigent, little serious and little professional. Inclusive, there was the problem of the lack of quality of the Brazilian executives of Merck, that never took seriously our proposal and never treated us with the
seriousness that Brazil deserves.

FOLHA - Will investments run away?

TEMPORÃO - All our data show the opposite. The Brazilian market is within the ten higher in the world; it reaches US$ 10 billions per year and is still growing.

FOLHA - Brazil wants investments but not exploitation?

TEMPORÃO - Exactly. We want fair rules, fair prices and a transparent relationship.

FOLHA - What about the negative impact of investment in R&D?

TEMPORÃO - I have demolishing data. Merck uses 20% of its world sales in R&D, nearly US$ 5 billion per year. In Brazil, it spends only 0.7 %.

FOLHA - The Chamber of Commerce also said that Brazil might possibly get out of the General Preferential System, a program of fiscal benefits (through which the country exports US$ 3,5 billions to the US.

TEMPORÃO - This is a specific view of this man, he doesn't speak in the name of the American government. There is no indication that this might take place. There is an attempt to disqualify and to make the decision of the Brazilian government look like piracy and like a break (violation) of patent. Brazilian decision is totally legal. His arguments are highly ideological, a political posture of retaliation.

FOLHA - Interfarma (Association of Pharmaceutical Industry in R&D) said that the generic from India has no quality and can shorten the life of patients with Aids by up to two years.

TEMPORÃO - This is a lie. We have documents of the World Health Organization
that guarantee the quality of generics. This is one more of irresponsible declaration that creates an atmosphere of insecurity for the patients.

FOLHA - Any chance to come back to discussion with Merck?

TEMPORÃO - At this moment, total silence. We are already in the process of  purchasing generic versions.