[Ip-health] Roger Bate op-ed: Brazil's Dangerous Denial

[mpalmedo@cptech.org]

http://www.techcentralstation.org/062705F.html

Brazil's dangerous denial

By Roger Bate
TechCentralStation.org
06/27/2005


When is a life-saving intervention somebody else's responsibility? From
the example of Brazil, the answer seems to be:  When it's expensive.

Brazilian Health Minister Humberto Costa has declared that the price of a
new anti-retroviral drug developed by Abbott Laboratories of Chicago is so
high that it is a risk to public health. He has given Abbott until the end
of this week to offer an acceptable price or Brazil will start producing a
generic drug at a state-run laboratory in Rio de Janeiro, according to BBC
News online.

The threat is credible, and it unfortunately appears to be legal under the
World Trade Organization's Doha Declaration (an amendment to the WTO's
TRIPS agreement on trade-related intellectual property rights). That
declaration was designed to allow for compulsory licensing and parallel
importing of patented drugs in health emergencies in poor countries.
Anti-retroviral virus treatment for HIV was the main impetus for this
initiative and so this drug, Kaletra, falls within its realm. Abbott is
already supplying drugs to Brazil at a loss, so there is every reason to
expect the company to give away the drug rather than giving up the
exclusive right to produce it, and have Brazil establish a worrying
precedent.

Initially, this process may seem to be a triumph of fair play. But those
with a longer view may draw parallels with the goose that laid the golden
eggs.

Abbott is a private company; it funds its own research and, crucially, the
onerous regulatory process required to register a drug, as do all
pharmaceutical companies. The average cost of bringing a drug to market is
$860 million. These costs are funded by the profits from successful
products, and few can expect a Viagra to land in their laps (as it were).

If it can't cover even its costs for drug development, any drug company
can not reasonably be blamed for losing enthusiasm for developing any more
anti-retrovirals or, indeed, anything else that might be deemed by a
health bureaucrat to be essential to public health.  And my own research
shows that there are 27% fewer companies working on AIDS research since
1997. Brazil's threats will only hurry more companies away from this
largely unprofitable enterprise.

The principle of Brazil's action seems to be: "You will give up your
property if I really need it." But has anybody really thought this
through? Should that approach apply to anything? In all other areas of
human interaction, there are laws against that sort of thing.

Brazil has won praise internationally for providing free anti-retroviral
drugs to anyone who needs them, but if it carries out its threat it will
have requisitioned a newly-developed product in which it has invested
nothing. In the meantime, it also will collect revenue for its program
from tariffs on other drugs, which in effect denies others access to the
medicines they need.  Brazil ordinarily  imposes an 8.8% tariff on drug
imports,  a policy that has profited Brazil's treasury. Waiving the tariff
for high-profile HIV drugs demonstrates that this practice is hard to
defend, yet it continues.

There are 183 million people in Brazil; 600,000 are estimated by the
health ministry to have HIV/AIDS. Not all will need anti-retrovirals, but
many may require more immediate treatment for opportunistic infections
such as tuberculosis - even if the TB drug imports have tariffs slapped on
them.

Meanwhile, Brazil has an even more basic requirement for life and health
for which it lacks a comprehensive plan. Some 43 million Brazilians
currently do not even receive water supply services, never mind sewage
treatment, Olivio Dutra, the Minister of Cities, told an UNCTAD meeting in
September 2004.

Water-borne diseases are an immediate threat to life and the worst
affected are children. Brazil's infant mortality rate of 30 deaths per
1,000 live births is 50% higher than Mexico's and more than four times
that of the United States.

So clearly, there is much to be done. And Brazil wants outside for
assistance. And, so far,  it's gotten it.

The Inter-American Development Bank has pledged $95 billion to Brazil over
the next 10 years to assist in water supply and treatment costs. The
lenders include European countries, Canada, Israel and Japan, with the
United States being a 30% shareholder.

Now, nobody's expecting countries to grovel in gratitude, but Brazil's
belligerent attitude in snapping at and biting the very hand that feeds it
- while a recognisable human trait - has begun to grate. What would the
world think if the U.S. government pulled support from these efforts if
Brazil continues to threaten its drug companies?

Brazil is in dangerous denial. It denies responsibility for paying for HIV
drugs and responsibility over letting its poorest die from entirely
preventable water-borne disease. Only those who want fewer HIV drugs can
welcome Brazil's actions, everyone else should be worried.

Dr Roger Bate is a fellow of the American Enterprise Institute