Brazil warns U.S. over AIDS patents

If cost of drugs doesn't come down, it says, it will make its own.
Rio de Janeiro - Brazilian health officials and nongovernmental organizations are accusing the United States of threatening a critical element of this nation's successful anti-AIDS program as part of an increasingly bitter trade dispute over Brazil's effort to manufacture more generic drugs. In a sign of how tense the clash has become, the Brazilian government has announced that if world market prices of two patented anti-AIDS drugs manufactured by U.S. and Swiss companies are not reduced by June, Brazilian companies will be allowed to produce the medicines no matter what the companies say. The dispute is part of a larger campaign by developing nations to get large pharmaceutical companies to lower the prices of their drugs, whose generic versions often cost 80 percent to 90 percent less than the brand-name product. The price of drugs for the treatment of AIDS and other life-threatening illnesses is one reason Brazil, South Africa and India, among others, have begun to develop, or are in the midst of developing, generic versions of them. "The prices of these drugs are beyond the realm of this world," said Paulo Teixeira, director of Brazil's national health program. "What we desperately need is a global negotiation over the prices of these medicines." The U.S.-Brazilian dispute began when the United States complained to the World Trade Organization last May about a provision of Brazilian patent law that says a foreign company must forfeit patent rights to a product after three years if the company does not begin to manufacture the product in Brazil during that time. The United States argued that this measure is designed to force international companies to make products in Brazil and thus violates WTO rules. After seven months of unsuccessful negotiations, the United States asked the WTO on Jan. 8 to form a dispute panel - akin to a trade court - to hear arguments from both governments and issue a ruling. The WTO panel is expected to announce a decision in June, at the earliest. Some experts on patent law and advocates for AIDS patients say the symbolic and political weight of the U.S. challenge may be more important than its legal or practical ramifications. Brazil, they point out, has been a champion of generic drug production and has offered assistance to other countries seeking to set up similar programs. "Why hassle Brazil?" said James Love, director of the Consumer Project on Technology, a Washington-based consumer group. "Because they're going around touting their model" for fighting AIDS "and the big drug companies are going ballistic because of that." U.S. officials deny that their recourse to the WTO panel will block Brazil's production of generic drugs or hurt its anti-AIDS effort. They say Washington's only concern is what they describe as the protectionist part of Brazil's patent law. The country already makes seven anti-AIDS drugs. "We have no intention of doing anything to keep them from making anti AIDS medicines," a U.S. trade official said. "They know that, and we know that. But they've clearly decided that the best defense is a good offense." "We're not attacking the Brazilians," a U.S. Embassy official in Brazil said. "This is really about a specific portion of law, and the question is: Who owns the patent?" Brazil has earned praise for its anti AIDS campaign, which has included free distribution of combinations of drugs, known as antiretrovirals, to about 100,000 Brazilians infected with HIV, the virus that causes AIDS, or who have contracted AIDS. At least 580,000 Brazilians are HIV-positive or have AIDS, but the number of new cases has stabilized, and AIDS-related deaths have begun to fall in recent years. Mr. Teixeira said that Brazil intends to manufacture two patented anti-AIDS drugs, efavirenz and nelfinavir, even while the case is being considered by the WTO panel if its deliberations drag on past June. At least 15,000 of the nation's AIDS patients take efavirenz, and another 22,000 take nelfinavir, according to the Health Ministry. New Jersey-based Merck Co. sells efavirenz under the trade name Stocrin for an annual wholesale price of $4,800 per course of treatment. Rights to nelfinavir are shared by Switzerland's Hoffmann La Roche Inc. and the U.S.-based Pfizer Inc., which sells it as Viracept for a wholesale price of $7,100 a year. Brazil has been paying the going rate, but if Brazilian companies were to make those drugs, health officials argue, each would cost less than half its current price. If Brazilian companies cannot manufacture them, then "the prices are just going to continue to be exorbitant, which means people are going to die over a purely economic question," said Willian Amaral, secretary-general of the Rio de Janeiro Grupo Pela Vidda, an AIDS support group.