The Brazilian government has refused to back off of its threat to break the patent Abbott Laboratories hold on the AIDS drug, Kaletra unless Abbott agrees to reduce the price of the drug significantly.
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, is 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 has been signed with Abbott and that negotiations would continue, as the current proposal does not sufficiently reduce the price per pill over the course of the next fives years.
The head of Brazil’s AIDS treatment program, Pedro Chequer, noted that nothing had been done to finalize any agreement. Chequer was pleased by this since “what Abbott proposed is not what we understand is in the interests of our country. Abbott has to come up with a new proposal.”
Abbott confirmed the ongoing nature of the negotiations and the lack of a final agreement.
If Abbott does not comply and make the drugs accessible to Brazil’s HIV/AIDS patients, Felipe says the breaking of the patent is still a final alternative. Brazil claims it could start producing the drug itself for about 40 cents per pill. Abbott is now charging the government $1.20 per pill.