[Ip-health] IPS story on Brazilian ARV price negotiations

[Mike Palmedo]

http://www.ipsnews.net/africa/interna.asp?idnews=3D21924

Bartering Is Best Medicine in AIDS Fight

Mario Osava

RIO DE JANEIRO, Jan 14 (IPS) - Obtaining a 77 percent discount and still
complaining might seem an unreasonable response in just about any
market, but not in Brazil when it comes to buying medicines needed to
provide free treatment to people with HIV/AIDS.

That deep discount is given by the pharmaceutical company Merck Sharp &
Dhome, subsidiary of the U.S.-based Merck consortium, for the Brazilian
Ministry of Health's purchases of efavirenz, an antiretroviral drug.

Efavirenz (also sold under the name Sustiva) is one of the 15 drugs used
in the ministry's free treatment programme, available to anyone with
HIV/AIDS in Brazil.

There are some 135,000 people benefiting from the programme, begun in
1996 and cited by the World Health Organisation (WHO) as an effective
way to fight the epidemic.

Merck agreed to reduce the price of efavirenz (used in Brazil since
1998) through gradual discounts, the last being a 25-percent cut in
November. The cost dropped to just 1.58 dollars per patient per day, the
pharmaceutical company's lowest price worldwide.

But the Brazilian government of Luiz In=E1cio Lula da Silva wants to make
the drug even cheaper, producing it in the state-run laboratory
Far-Manguinhos in Rio de Janeiro. The estimated cost of a daily dose of
generic efavirenz would be 87 cents on the dollar.

For this a =94voluntary=94 license is needed from Merck, which would be pai=
d
patent rights in return. That proposal, currently under negotiation, =94is
one possibility,=94 Merck's local communications director, Joao Sanches,
told IPS.

In contrast, relations between Brazil and another transnational lab, the
Switzerland-based Roche, are better described as confrontational.

The Lula government is threatening to implement =94compulsory licensing=94,
included in Brazilian patent law, which would mean breaking Roche's
monopoly over those rights to allow others to manufacture nelfinavir,
another drug used in the anti-AIDS programme since 1999 and prescribed
for 24,000 people in Brazil.

Roche made it known that it had already granted 66-percent price cuts to
the Ministry of Health and recently had offered to further reduce it,
resulting in a total cut of 72 percent off the original price of the drug.

=94It is relatively little, because drug production by a state-run lab
would allow an additional 30 percent discount, even paying four percent
for patent rights,=94 Alexandre Grangeiro, head of the ministry's AIDS and
sexually transmitted diseases division, told IPS.

The U.S. company Bristol-Myers Squibb offered an immediate 76.4-percent
price cut for its drug atazanavir with its incorporation into the
government's free anti-AIDS programme at the end of 2003, Grangeiro
pointed out.

This attitude of obsessive haggling, negotiating more and more
discounts, is indispensable =94for making financially sustainable the free
distribution of medicines=94 to all people who need them, he said.

The annual cost of the medicines, estimated at 550 million reais (190
million dollars) this year, could rapidly rise 30 to 45 percent if older
drugs must be replaced with newer, more expensive drugs as a result of
the human immunodeficiency virus (HIV) developing resistance, explained
the official.

Until last November the three newest medications, including efavirenz
and nelfinavir, represented 63 percent of the Brazilian programme's
expenses, according the Ministry of Health.

For the pharmaceutical industry it is good business to have their drugs
included in the government programme, despite the heavy discounts,
because the labs are assured sales without having to spend money on
advertising or distribution.

For Merck, for example, the antiretrovirals, as the AIDS drugs are
known, represent 18 percent of the company's sales in Brazil, equivalent
to 28 million dollars a year.

Worldwide, that represents just 1.5 percent of Merck's sales. The firm
has offices in 62 countries and sells its products in all countries.

Of the 300,000 people in the developing world who have access to medical
treatment for HIV/AIDS, 135,000 are Brazilian. In other words, this
South American country represents nearly half of that market, noted
Grangeiro.

The WHO estimates that six million people in developing countries need
treatment for AIDS, but just five percent receive it. This reality
prompted the United Nations agency to launch a campaign last September
to attend to three million people with HIV/AIDS by 2005. This could open
an immense market for the manufacturers of antiretroviral drugs.

That initiative owes a great deal to the Brazilian example, which has
cut the country's AIDS mortality rate in half.

Merck granted the big discounts on drugs in Brazil because it recognised
the quality and effectiveness of the national anti-AIDS programme, =94but
the price is not the only aspect of the matter,=94 says company spokesman
Sanches.

Treating people with HIV/AIDS =94is not an expense, but rather a savings=94
in terms of lives saved, families kept intact, hospitalisation avoided,
he said. Brazil saved two billion dollars over the past three years
thanks to the slashed prices of AIDS drugs.

In response to complaints that the Brazilian programme is expensive,
Sanches says that today it costs the equivalent of 1.8 percent of the
Ministry of Health's budget, much less than the three percent of the
budget it represented three years ago.

Furthermore, according to the WHO, Brazil is among the Latin American
countries that invest least in public health in proportion to its gross
domestic product -- just ahead of Paraguay and the Dominican Republic,
he said.

Merck defends its demands that patent rights be respected, arguing that
it is a means to stimulate further investment in new and better
medicines. But the lab also aims to promote the broadest possible access
to these medical resources, said Sanches.

With respect to AIDS drugs, the company's policy is to offer them at
cost in the poorest regions and where there is highest incidence of HIV
infection, such as in Sub-Saharan Africa.

Brazil, which is not that poor and less than one percent of the
population is HIV-positive, can afford to pay more, but with discounts
in relation to the prices charged on the markets of industrialised
countries, Sanches said.