[Ip-health] Wall Street Journal: Brazil to Break Patent On Merck AIDS Drug

[Thiru Balasubramaniam]

http://online.wsj.com/article/SB117829976582992421.html

Brazil to Break Patent
On Merck AIDS Drug
By ALASTAIR STEWART
May 5, 2007

SAO PAULO -- Brazilian President Luiz Inacio Lula da Silva Friday
signed a compulsory license, breaking the patent on an anti-retroviral
AIDS drug made by the U.S. pharmaceutical giant Merck & Co.

Brazil's government issued the groundbreaking decree after rejecting a
Merck offer to sell the drug at $1.10 per pill, the equivalent of a 30%
discount.

Brazil claims the price is unjust considering it can acquire the drug
for $0.45 from generic manufacturers, the president said in a
statement. "Between our trade and our health [interests], we chose to
protect our health," said President Lula in Brasilia at a ceremony
marking the signing of the decree.

Jose Gomes Temporao, Brazil's health minister, said: "We had eight
meetings with Merck and at none of them did they present a satisfactory
proposal. At best, they proposed a 30% discount. We told them we needed
a 60% discount."

Merck said in a statement that it is "profoundly disappointed" by
Brazil's decision to break the patent.

A compulsory license allows a country to manufacture or buy generic
versions of patented drugs while paying the patent holder only a small
royalty. Brazilian law and rules established under the World Trade
Organization allow for compulsory licenses in a health emergency or if
the pharmaceutical industry uses abusive pricing.

This is the first time Brazil has overridden a drug patent after
threatening to do so on various occasions in the past.

After Thailand moved to override patents on three anti-AIDS drugs,
including those made by Abbott Laboratories and Merck, the U.S. placed
Thailand on a list of copyright violators.

During the signing ceremony, Mr. Lula warned that Brazil could break
other patents, if prices weren't affordable. "People shouldn't be able
to get rich through the misfortune of others," he said.

The U.S.-Brazil Business Council expressed alarm at Brazil's decision.

"Just days after Brazil was recognized for improving its enforcement of
intellectual property rights, this is a major step backward for the
country's development. Brazil is working to attract investment in
innovative industries that rely on IP, and this move will likely cause
investments to go elsewhere," the council said in a statement.

Brazil provides free AIDS drugs to anyone who needs them and
manufactures generic versions of several drugs that were in production
before Brazil enacted an intellectual property law in 1997 to join the
WTO.

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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