[Ip-health] Brazil's latest compulsory licensing announcement

[James Packard Love]

http://www.cptech.org/blogs/ipdisputesinmedicine/2007/04/brazils-
latest-compulsory-licensing.html

Thursday, April 26, 2007
Brazil's latest compulsory licensing announcement
by James Packard Love

Michel Lotrowska, a musician and health activist in Brazil, posted
this informative note (http://lists.essential.org/pipermail/ip-health/
2007-April/011020.html) on Brazil's latest announcement that it was
considering a compulsory license on patents for a medicine -- in this
case, efavirenz, the BMS/Merck AIDS drug marketed by Merck in Brazil.

As noted by Michel and others, the Brazil government is using the
threat of the compulsory license to negotiate a lower price from
Merck. Most health activists and groups, including Knowledge Ecology
International, say that Brazil should forget about the negotiations
with Merck, and just issue the compulsory license, and then buy the
drug from the lowest price suppliers (of acceptable quality). Why?

First, no one can really say today what the long term best price will
be for this drug. Brazil thought they were getting a good price when
they previously negotiated a $580 per year price. When Thailand
actually did issue a compulsory license, they were able to buy the
drug from a Generic supplier for $238 per year.

How low can prices go? With larger economies of scale, this product
should be available for less than $400 per formulated kilo, or less
than $90 per year, for the 600 mg per day dose. But his will only
happen if several large countries buy from generic suppliers.
Thailand and Brazil together would make a big difference.

Second, Brazil needs access to generic versions of new fixed dose
combinations, like FTC + TDF + EFV, not to mention newer protease
inhibitors that are co-formulated with ritonavir. Brazil, a member of
UNITAID, needs to create a patent pool for all patents that are
relevant for sustaining treatments for AIDS, and ensure that the pool
has access to everything, through compulsory licenses if necessary.

Brazil then should negotiate on the remuneration for patent owners.
They should not make the mistake of Thailand, and start the
negotiation with a royalty rate that is very low, because the world
will see this as evidence that the country will not pay a reasonable
amount. One possibility would be use the 2005 WHO/UNDP remuneration
guidelines, which I wrote. Another possibility would be to set aside
a fraction of the budget for ARV purchases for a prize fund that
would reward developers of new AIDS drugs, in proportion to the
impact of the drug on improving health outcomes. This second approach
would be the most innovative, and sustainable, in the longer run, in
our opinion.

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James Packard Love
Knowledge Ecology International
http://www.keionline.org
james.love@keionline.org
Washington, DC +1.202.332.2670

"If everyone thinks the same: No one thinks." Bill Walton"