[Ip-health] (SUN): Brazil: Moves on compulsory license after failed talks with drug company

[Thiru Balasubramaniam]

Brazil: Moves on compulsory license after failed talks with drug company

Geneva, 30 Apr (Sangeeta Shashikant) -- The Brazilian government has
declared
its intention to issue a compulsory licence for the AIDS drug
Efavirenz, if the
patent holder, the drug multinational company Merck Sharpe and Dome
(MSD),
does not adequately reduce its price.

The Ministry of Health revealed that its decision to issue a compulsory
license
ordinance came after talks with the company failed to lower prices of
the AIDS
drug.

The Ministerial Ordinance No. 866 dated 24 April 2007 declared that
"there exists
the possibility of compulsory licensing of patents in the public
interest", as
provided for in national laws, and decides "to declare public interest
in relation to
Efavirenz for the purposes of the granting of compulsory licensing for
public
non-commercial use, in order to guarantee the practicability of the
National STD
and AIDS Programme, ensuring the continuity of universal and free
access to all
medicines necessary for the treatment of people living with HIV and
AIDS."

The Ministerial Ordinance shall come into force from the date of its
publication.

The government has also issued a detailed statement in the form of
questions and
answers, explaining its move. It has been conducting negotiations since
2006 with
Merck over the price of the drug.

Efavirenz is an important drug as it is estimated that 75,000 or 38% of
the 200,000
patients having antiretroviral treatment in Brazil will be using it by
the end of this
year.

According to the Ministry of Health (MOH), despite the increasing
number of
patients taking the drug, the prices for Efavirenz have not altered
much since 2003.

Efavirenz (in tablets of 600 mg) is currently available in Brazil at
approximately
$580 per patient per year. This is 136% higher than the price offered
by the same
company in Thailand, where about 17,000 people are taking the drug.

The MOH says that it has received proposals for the supply of Efavirenz
(600mg)
by generic drug companies at far cheaper prices than the price that
Merck has been
charging in Brazil.

Generic versions of the drug that have been pre-qualified by the World
Health
Organisation have been offered to Brazil at between $163.22 and $166.36
per
patient per year, or at a cost of $0.4472 to $0.4558 per tablet.

According to the MOH, buying the drug at these lower prices would reduce
expenditure on Efavirenz by around $30 million per annum on the 2007
contract,
with estimated savings by 2012 (when the patent expires), of $236.9
million.

Issuing a compulsory license is a measure allowed by the WTO's TRIPS
Agreement to overcome the patent barrier and enable the supply of
cheaper generic
medicines either through import or local manufacture.

Where a compulsory licence is issued for "public non-commercial use",
as appears
to be the intention of Brazil, there is no requirement to engage in
prior negotiations
with the patent holder.

However, the MOH has said that since 2006, it has been in constant
negotiation
with MSD to reduce its price, but with no success.

The Ordinance states that "the Ministry of Health undertook, without
success, all
efforts to reach an agreement with the manufacturer of Efavirenz
regarding the
prices charged in Brazil, with reasonable terms and conditions to meet
the public
interest."

The MOH was offered a 2% reduction in price (for the 2007 supply
contract) by
MSD, which it considered insufficient.

The MOH said that it instead requested that MSD charge prices
compatible with
the growing use of Efavirenz in Brazil and with the prices that are
being charged
internationally. It indicated that it would accept the same price
offered to Thailand,
namely, Efavirenz 600mg for $20.21 per bottle of 30 tablets, being the
equivalent
of approximately $246 per patient per year.

With regard to the oral solution version of the drug, the MOH said that
it would
have accepted the prices charged in First World countries, namely,
$16.92 per
180ml bottle of 30mg/ml oral suspension.

However, according to the MOH statement, "the company was relentless
with
regard to the price. Therefore, the discussion came to an end without a
satisfactory
agreement."

The MOH also mentioned that MSD sets its differential pricing, i.e.
between
$277.40 and $697.00 per patient per year based on the countries' Human
Development Index and/or HIV prevalence, but in calculating the price,
other
relevant aspects were totally disregarded, such as the extent of the
population's
access to treatment, the absolute number of patients who take the drug
or even if it
is used for initial treatment, as is the case in Brazil.

The Brazilian move can be expected to spark a new round of negotiations
with
MSD. Pharmaceutical companies are known to be more responsive to a
government request for significant reduction in drug prices where there
is an
imminent issuance of a compulsory licence, or following the issuance of
a
compulsory licence.

MSD offered to the Thai government Efavirenz at $0.72 per tablet of 600
mg (650
baht per bottle), however with several conditions, after Thailand
recently issued a
compulsory licence for the import and local manufacture of Efavirenz.

The generic Efavirenz imported from the Indian company Ranbaxy at less
than
half the original price of the patented product meant that the Thai
Ministry of
Health will be able to provide Efavirenz to 20,000 additional AIDS
patients.

MSD also went on to publicly announce a reduction in the price of its
HIV/AIDS
medicine STOCRIN (efavirenz), to $237.25 per patient per year (from
$0.76 to
$0.65 per day)  for purchasers in countries in the low category of the
Human
Development Index (HDI) and in medium HDI countries with an adult HIV
prevalence of 1% or greater.

In medium HDI countries with an adult HIV prevalence of less than 1%,
it offered
a price of $1.80 per day, or $657.00 per patient per year, reduced from
$1.91 per
day for the same formulation.

Malaysia issued a compulsory license in November 2003 to import generic
Didanosine, Zidovudine and Combivir for HIV/AIDS treatment from India.
Following this, the patent holders Glaxo Smith Kline (GSK) and Bristol
Myers
Squibb reduced its price for the patented products by more than 50%.

The Brazilian government has also gone through a similar experience. In
2005, it
made a declaration that the Lopinavir/Ritonavir combination (marketed
by the
brand name Kaletra) was of public interest and on numerous occasions
indicated
that it would issue a compulsory licence.

This threat of a compulsory licence eventually led to an agreement with
the patent
holder Abbott for a reduction in the price. The government did not
issue a
compulsory license.

Brazilian NGOs are strongly supporting the government move. The Working
Group on Intellectual Property (GTPI) of the Brazilian Network for the
Integration
of Peoples (REBRIP) said that it believed that the government would not
be once
again a "Tiger without Teeth".

Instead, it expects that the government will this time "follow through
with its
decision to guarantee access to an essential medicine by initially
importing cheaper
generic versions and later by producing the drugs locally."

The GTPI/REBRIP said that a technical study that it carried out in
2006, as well as
other studies by the UN Development Programme and the Clinton
Foundation,
showed that Brazil had adequate national drug production capacity.

It added that the issuance of a compulsory licence constitutes a
historical decision
and contributes to the sustainability of the State policy guaranteeing
universal
access to medicines, demonstrating also the maturity of Brazilian
institutions that
used to vacillate when facing international pressure.


---------------------------------
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org