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Eleven Latin American Nations Join Together to Pressure Drug Companies Into Lowering Prices

Aug 7, 2005 | Encouraged by Brazil’s aggressive approach to the problem of soaring drug prices, eleven Latin American health ministers are meeting with AIDS drugs manufacturing companies in an attempt to cooperatively negotiate lower prices.

The countries hope that by combining their purchasing power they will be able to negotiate a "ceiling price" for antiretroviral treatments for HIV/AIDS patients.

Andrés Lebovich, undersecretary for preventive programs and promotion at the Argentine Health Ministry, said that individual countries could then later negotiate with companies for an even lower price.

Officials from Chile, Bolivia, Ecuador, Brazil, Peru, Venezuela, Colombia, Argentina, Mexico, Paraguay and Uruguay met on Wednesday with 24 drug and diagnostics companies including Abbott Laboratories, GlaxoSmithKline PLC, Merck & Co., Bristol-Myers Squibb Co., Roche Holding AG and Bayer AG.

Merck said in a statement that it "has always felt that constructive, long-lasting public/private partnerships are the most effective way in which sustainable progress can be made to halt the spread of this disease" and to treat HIV/AIDS.

It seems likely, however, that some of the drug companies will seek assurances that the ministers will not endorse the kind of high-pressure tactics applied by Brazil last month in negotiations with Abbott Laboratories.

On June 24, then Brazilian Health Minister, Humberto Costa announced that the price of the anti-AIDS drug Kaletra was so high that it posed a risk to public health. Under Brazilian law, when such an emergency is declared, the government has the authority to ignore the patent held by U.S. based Abbott Laboratories in order to allow generic copies of the drug to be made in the country’s state-run lab in Rio de Janeiro.

Abbott was given 10 days to cut the price of the drug to an affordable level for the 600,000 Brazilians who suffer from HIV/AIDS.

Abbott claimed it was already selling its drugs in Brazil at a financial loss and argued the move would not be in the long-term best interests of patients. It showed it was taking the ultimatum seriously though when it stated it was “willing to work with the government to find a mutually agreeable solution.”

Brazil has won international praise for its policy of providing free anti-retroviral drugs to anyone who needs them. By pressuring a major pharmaceutical company to lower its price, even on one important drug, Brazil sent a strong message to an industry that has always placed profit above compassion.

For two weeks, Abbott Labs attempted to take the position that it would not be bullied into cutting its price by Brazil. As the deadline approached, however, Abbott realized the government would not back down on its threat to break Abbott’s patent on the most prescribed protease inhibitor used in the treatment of HIV.

Thus, in order to protect its intellectual property in a drug with 10 years remaining on its patent, on July 8 Abbott Labs flinched and rolled back the price of the drug to a point where it was apparently acceptable to the Brazilian government.

Although the financial terms of the agreement were not disclosed, Abbott indicated the price would be calculated on the number of people using the drug instead of per-capsule. Brazil’s Health Ministry stated that the new agreement would save Brazil $18 million next year and $259 million during the next six years.

A week later, however, the agreement, which was commended for avoiding a trade dispute and which both parties considered a triumph, was still unsettled. 

As Brazil’s new health Minister Jose Saraiva Felipe took office he discovered “that no deal had been sanctioned.” He said in an interview with the Correio Brazilinese newspaper “I thought that the question was closed but it was still open.”

Felipe reported that no contract had been signed with Abbott and that negotiations would continue, as the current proposal did not sufficiently reduce the price per pill over the course of the next fives years.

Announcements of the results of the meetings of the regional Latin American health ministers are expected as early as this week.

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