[Ip-health] From Brazil's Ministry of Health

[Stephanie Burgos]

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03.05.2007

Brazil to issue compulsory license for Efavirenz

For the first time, Brazil issues a compulsory license for a drug. The pres=
ident of the Republic, Luiz In=E1cio Lula da Silva, signed on Friday (04), =
in Bras=EDlia (DF), a decree to sanction the compulsory licensing of the an=
tiretroviral drug Efavirenz. The company that holds the patent for the prod=
uct, Merck, had been given seven days in which to make new proposal after t=
he Minister of Health, Jos=E9 Gomes Tempor=E3o, declared the drug to be of =
public interest by signing Ministerial Ordinance No. 886 on April 24th. Dur=
ing this period the laboratory offered a discount of 30% on the current pri=
ce of US$ 1.59 per tablet paid by the Federal Government. This proposal was=
 considered to be unsatisfactory, since Brazil would be able to obtain the =
product elsewhere for US$ 0.45.

Compulsory licensing enables the Ministry of Health to import generic versi=
ons of Efavirenz from laboratories that are prequalified by the World Healt=
h Organization (WHO). The quality, safety and effectiveness of the imported=
 drug offered to Brazilian patients are guaranteed by the bioequivalence an=
d bioavailability tests required to be performed. Currently, three Indian l=
aboratories meet the WHO requirements, namely: Cipla, Ranbaxy and Aurobindo=
.

The antiretroviral drug Efavirenz is the most used imported drug in AIDS tr=
eatment. Currently, 38% of AIDS patients take Efavirenz as part of their tr=
eatment scheme. It is estimated that by the end of this year, 75,000 of Bra=
zil's 200,000 AIDS patients will be taking the drug.

At the current prices charged by Merck in Brazil, the annual cost per patie=
nt is equivalent to US$ 580, representing budgeted expenditure of US$ 42.9 =
million for the year 2007. The prices charged for the generic product resul=
t in an annual cost per patient that varies between US$ 163.22 and US$ 166.=
36. Based on these amounts, under compulsory licensing, expenditure reducti=
on in 2007 will be around US$ 30 million. Savings of US$ 236.8 million are =
estimated to be made by the year 2012, when the Efavirenz patent expires.

The decision of the Brazilian government is in absolute compliance with int=
ernational requirements and with Brazilian legislation. Compulsory licensin=
g in the public interest is taken to be a legitimate and necessary measure =
to ensure that all patients who are provided with Efavirenz via the Ministr=
y of Health's National STD and AIDS Programme have access to it.

Public interest - Compulsory licensing is a flexibility provided for by art=
icle 31 of the Trade-Related Aspects of Intellectual Property Rights Agreem=
ent (TRIPS Agreement). This practice is used by developed countries, such a=
s Italy and Canada in relation to pharmaceutical products and also by devel=
oping countries. In the case of antiretroviral drugs, Mozambique, Malaysia,=
 Indonesia and Thailand have already made use of this provision. Furthermor=
e, Thailand recently issued compulsory licensing for Efavirenz.

 In Brazil, compulsory licensing can be implemented in the event of circums=
tances provided for in the Brazilian Industrial Property Law, such as the a=
busive exercising of patent rights, the abuse of economic power, absence of=
 local production, unsatisfactory commercialization, national emergency and=
 public interest.

In the case of the antiretroviral drug Efavirenz, compulsory licensing has =
been granted based on the public interest in the light of the need to ensur=
e the viability of the National DST/AIDS Programme. Compulsory licensing in=
 the public interest must be granted for non-commercial use, non-exclusive =
production, and temporarily for a fixed period of time, although it may be =
extended and remain in force for as long as the public interest exists. It =
must be emphasized that independently of this the remuneration due to the p=
atent holder remains ensured.

Further information
Ministry of Health Press Office
National STD/AIDS Programme
Tel.: +55 61 3448-8100 / 3448-8088
E-mail: imprensa@aids.gov.br
Portal: www.aids.gov.br

History of the National STD and AIDS Programme

The Brazilian National STD and AIDS Programme (NAP) came into existence fol=
lowing the publication of Ministerial Ordinance No. 236, in May 1985, three=
 years after Brazil's first AIDS case was registered, and when the world st=
ill knew very little about the disease, considered at that time to be a "ga=
y cancer" or "gay plague ". By the end of the 1980s, however, it was discov=
ered that there had been an AIDS case in the city of S=E3o Paulo as early a=
s 1980.

Following the onset of the epidemic, the constant development of new drugs =
has lead to a significant increase in the life expectancy of people living =
with HIV by stemming the multiplication of the virus. The drugs delay the a=
ppearance of the symptoms of the disease and slow down the reduction of the=
 immune system's protective cells. Even so, they are not able to eliminate =
HIV.

Long before the United Nations General Assembly Special Session on HIV/AIDS=
 (UNGASS HIV/AIDS) recommended that efforts to combat the AIDS epidemic sho=
uld be wide-ranging and inclusive, having a balance between prevention, hea=
lth care and the promotion of human rights, in addition to the active parti=
cipation of people living with the disease in decision making processes, th=
e Brazilian STD and AIDS Programme was already working in this way. Such pi=
oneerism - which is a fundamental feature of the NAP - has been an example =
to several different countries around the world, principally least develope=
d countries.

Civil society participation was made official in 1986, with the setting up =
of the National STD and AIDS Committee (CNAIDS). Ever since the creation of=
 the CNAIDS the representation of civil society organizations has been guar=
anteed by ministerial ordinances. With effect from 1994, Ministerial Ordina=
nce No. 1,028/GM has ensured the participation of five representatives of n=
on-governmental organizations on the Committee, thus enabling civil society=
 to collaborate with the Committee's discussions and activities. The repres=
entatives are indicated by civil society itself, by means of elections held=
 during the National AIDS Service NGOs' Congresses which take place every t=
wo years.

The first medication used to contain the progression of immune deficiency i=
n AIDS patients was AZT (Zidovudine), in 1987. By 1991 AZT was already bein=
g produced in Brazil. In the same year AZT began to be distributed by the N=
ational Health System (NHS), although without universal access. AZT proved =
itself to the effective in the prevention of mother-to-child HIV transmissi=
on. The following year the World Bank forecast that 1.2 million Brazilians =
would have HIV by the year 2000. Today, 15 years later, Ministry of Health =
studies estimate that Brazil has 600,000 people with HIV.

It was in 1996, however, that an important victory in the fight against the=
 disease was achieved. The Federal Government sanctioned Law No. 9,313/96, =
proposed by Senator Jos=E9 Sarney, which ensures free access to antiretrovi=
ral (ARV) drugs via the NHS to all AIDS patients. In the same year Brazil a=
lso began using combined treatment, commonly known as "cocktail" treatment.=
 The combination of ARV drugs stems the progression of the disease and avoi=
ds the deterioration of the immune system. The number of AIDS deaths fell d=
rastically following this new form of treatment.

Over time this strategy has shown itself not only to be effective, from the=
 point of view of reduced mortality rates, but also efficient in saving res=
ources, since expenditure on AIDS in its early stages costs less than repea=
tedly admitting seriously ill patients to hospital.

Ever since 1996, the National AIDS Programme has held periodic meetings wit=
h specialists in the treatment of the disease to determine parameters for t=
he treatment and monitoring of people with AIDS. The treatment consensuses =
that are reached are published in documents that serve as guidelines for do=
ctors who treat AIDS patients and well as for the purchase of the drugs by =
the Programme itself.

In 1997, the national production of antiretroviral drugs was begun and the =
price of imported drugs began to fall, so that by 2002 there were price red=
uctions of up to 83%.

The Brazilian defence of universal access was taken to the 1998 World AIDS =
Conference in Geneva, when the Minister of Health put forward the proposal =
that universal access to antiretroviral drugs is a human right, based on th=
e positive results achieved with the country's anti-AIDS policy. 1998 was a=
lso the year in which Law No. 9,656 came into force, making it compulsory f=
or private health plans to cover AIDS related hospital expenses.

In 1999 Brazil introduced genotyping tests to identify resistance to anti-A=
IDS drugs. In the same year pregnant women began taking rapid detection tes=
ts to find out their HIV status at childbirth in order to complement examin=
ations carried out during antenatal care.

One year later, in Durban, the National STD and AIDS Programme made a firm =
stance among developing countries in defence of the production of generic d=
rugs for AIDS treatment. This stance caused worldwide debate about patents =
and price abuse on the part of the pharmaceutical industry. In 2001, the Un=
ited Nations Educational, Scientific and Cultural Organization (UNESCO) awa=
rded Brazil a prize in the category "Human Rights and Culture of Peace", in=
 recognition of the activities undertaken by the Programme.

Another political decision that caused worldwide repercussion was the Minis=
try of Health's refusal to receive funding from the United States Agency fo=
r International Development (USAID) owing to its not accepting the exclusio=
n of sex workers from intended AIDS related actions and the imposition of t=
he United State's ABC policy (Abstinence, Be faithful, use a Condom, if nec=
essary).

The appearance of cases of people resistant to anti-HIV treatment has lead =
the Ministry of Health to introduce and invest in new drugs that, in turn, =
are patented and expensive. In 2003, for example, R$ 551 million were inves=
ted in the purchase of antiretroviral drugs. In 2006, expenditure was more =
than R$ 960 million - almost double the amount spent in 2003. Most of this =
increase was due to the purchase of patented drugs.

Brazil has faced pressure from the multinational pharmaceutical industry wh=
ich, protected by international patent legislation, charges blatantly abusi=
ve prices for the new drugs, as is the case of antiretroviral drugs. The pr=
oduction of generic medication is an important arm for the Brazilian govern=
ment in negotiating with the pharmaceutical industry. Eight of the seventee=
n ARV drugs currently distributed by the NHS are produced nationally.

Background to the negotiations - In August 2001, the then Minister of Healt=
h, Jos=E9 Serra, requested the compulsory licensing of the Nelfinavir paten=
t (made by Roche). The decision was taken following nine months of negotiat=
ions with the laboratory. However, on the same day as the announcement was =
made, the Minister further announced that the process had been interrupted.=
 This happened because Roche agreed to reduce the price of the drug by 40%.

In December 2003, Health Minister Humberto Costa announced that compulsory =
licensing could be adopted for the production of Nelfinavir in Brazil. On t=
hat occasion, Humberto Costa explained that he expected to negotiate with R=
oche, but that compulsory licensing would be decreed if necessary. In Janua=
ry 2004 the Health Minister was successful in obtaining a price reduction f=
or five drugs: Nelfinavir, Lopinavir, Efavirenz, Tenofovir and Atazanavir. =
The agreement resulted in a 37% reduction in the prices previously paid for=
 these antiretroviral drugs.

In June 2005, the President of the Republic, Luiz In=E1cio Lula da Silva, a=
nd the Minister of Health, Humberto Costa, signed a declaration of public i=
nterest in relation to the antiretroviral drug Kaletra (Lopinavir + Ritonav=
ir), made by Abbott Laboratories. In July of the same year, the Minister of=
 Health issued a statement on the conclusion of the negotiations with Abbot=
t, which ensured a reduced price for the drug for six years, access to the =
new Kaletra formulation (known as Meltrex) and the transfer of the technolo=
gy for the formulation of Lopinavir + Ritonavir. The laboratory agreed to r=
educe the unit price of Kaletra capsules from US$ 1.17 to US$ 0.63 each, wi=
th effect from March 2006, representing a saving of US$ 339.5 million betwe=
en 2006 and 2011.

Further information
Press Office - National STD and AIDS Programme
Tel.: +55 61 3448-8100 / 3448-8088
E-mail: imprensa@aids.gov.br
Portal: www.aids.gov.br