[Ip-health] GSK signs vaccine deal with Brazil

[Baker, Brook]

--
[ Picked text/plain from multipart/alternative ]
It=E2=80=99s been obvious for some time that Brazil has been using threats =
of compulsory licenses and price negotiations to advance its industrial pol=
icy.  On several occasions, it has locked itself into long-term supply cont=
racts (e.g., previously on Kaletra) in exchange for end-of-patent-term tech=
nology transfer and interim investments/collaboration in pharmaceutical cap=
acity.  In the case of Kaletra, Brazil bet badly, because the long-term pri=
ce discount it negotiated with Abbott was eventually undercut following the=
 CL by Thailand, whereby Abbott offered a lower-middle-income country price=
 of only $1000 instead of the much higher price negotiated by Brazil.  Fort=
unately for Brazil, it was allowed to ride on Thailand=E2=80=99s coat tails=
.=0D
=0D
This time Brazil is locking itself out of the potential generic market for =
pneumococcal vaccine with an eight year agreement.  Depending on any undisc=
losed cancellation clauses, Brazil is also locking itself out of being able=
 to switch to an even more effective product, including perhaps a combo vac=
cine.  Although Brazil  pays discounted and decreasing prices over time, th=
ose prices are likely to be quite a bit higher than the price of an eventua=
l generic equivalent.=0D
=0D
Brazil=E2=80=99s decision to pursue national industrial policy via long-ter=
m price and technology transfer deals with Big Pharma has repercussions bey=
ond its own borders.  Because of its size and purchasing power and its comm=
itment to supplying essential medicines to its populations, Brazil plays an=
 important role in structuring the global market for potential generic entr=
ants.  When Brazil goes it alone, it shrinks the collective market and disi=
ncentivizes even earlier generic entry.  It also sends and illusory message=
 that most developing countries are better off negotiating with Big Pharma =
than using TRIPS-compliant flexibilities to access cheaper generic equivale=
nts of assured quality.  Although it might be tempting to think that Brazil=
=E2=80=99s lower price becomes immediately available for other developing c=
ountries, including those in the region, the historical evidence is otherwi=
se.  Brazil has market clout and an improving pharmaceutical sector =E2=80=
=93 two bargaining chips that cannot be matched by many of its neighbors.=
=0D
=0D
South Africa has followed an industrial development policy similar to Brazi=
l.  It has eschewed compulsory licensing in favor of voluntary licenses bet=
ween Big Pharma companies and S. Africa=E2=80=99s leading generic producers=
, especially Aspen Pharmacare.  Of course, S. Africa and Aspen have benefit=
ted from the boldness of the Treatment Action Campaign and AIDS Law Project=
 in seeking competition-based licenses.  Accordingly, it is now routine for=
 Big Pharma to grant a limited number of voluntary licenses in S. African s=
imply because TAC/ALP=E2=80=99s legal strategy has been so effective.=0D
=0D
Brazil and South Africa could help regain momentum for =E2=80=9Cglobal=E2=
=80=9D access to medicines if they pursued less individualistic solutions. =
 In particular, they could be much bolder in providing public support for t=
he UNITAID Patent Pool which offers a new business model for invigorating r=
esearch into heat-stable, pediatric, and new-combination formulations neede=
d developing countries and in promoting robust generic competition in both =
low-income and middle-income countries with respect to AIDS (and potentiall=
y other) medicines.=0D
=0D
Professor Brook K. Baker=0D
Health GAP (Global Access Project)=0D
Northeastern U. School of Law=0D
Program on Human Rights and the Global Economy=0D
400 Huntington Ave.=0D
Boston, MA 02115 USA=0D
(w) 617-373-3217=0D
(cell) 617-259-0760=0D
(fax) 617-373-5056=0D
b.baker@neu.edu=0D
=0D
=0D
GSK signs lifetime deal with Brazil for pneumococcal vaccine=0D
By Andrew Jack=0D
Published: September 28 2009 03:00 | Last updated: September 28 2009 03:00=
=0D
GlaxoSmithKline has sealed an innovative =E2=82=AC1.5bn (=C2=A31.38bn) cont=
ract with Brazil guaranteeing sales of its pneumococcal vaccine, designed t=
o prevent pneumonia and meningitis, over the entire life of the product.=0D
=0D
The deal marks a watershed in negotiation of a long-term contract in a way =
that provides GSK with an agreed price and volume, starting at =E2=82=AC11.=
50 a dose and falling to =E2=82=AC5 in future years.=0D
=0D
Most drugs and vaccines are sold over far shorter periods and subject to un=
certainties over arbitrary price reductions, as well as the threat of compe=
tition from rival low-cost generic alternatives.=0D
=0D
The deal comes as GSK continues to expand in emerging markets and is divers=
ifying away from drugs into vaccines and other products.=0D
=0D
The company agreed to supply enough doses of Synflorix to vaccinate the 13m=
 children requiring coverage each year for at least eight years, underpinne=
d by a technology transfer agreement that will eventually allow Brazil to m=
anufacture the vaccine itself.=0D
=0D
Brazil's health minister and Andrew Witty, GSK's chief executive, unveiled =
the deal in London on Friday to strengthen Brazil's pharmaceutical research=
 and development capacity, including a =E2=82=AC17m joint project to develo=
p a Dengue vaccine.=0D
=0D
Depending on the extent of technology transfer and Brazil's ability to manu=
facture the vaccine, which Mr Witty described as "probably the most technic=
ally complex vaccine in the world", GSK may still earn some income even aft=
er the contract ends.=0D
=0D
Some countries, including Brazil, have threatened or introduced compulsory =
licenses to overturn drug company patents and permit competition or force p=
rice reductions.=0D
=0D
The price represents a significant discount tothat of about =E2=82=AC35-=E2=
=82=AC40 a dose at which the vaccine is sold in Europe, but the high volume=
s and long timescale provide unusual certainty to the company.=0D
=0D
The action also sets a baseline for sales in other middle-income countries,=
 and for the Advance Market Commitment, a bulk purchase agreement with dono=
r governments to help buy the vaccine for low- income countries.=0D
=0D
Mr Witty said: "This wasn't the first and I don't believe it will be the la=
st such contract. It shows GSK and Brazil are really coming together with t=
he same mindset."=0D
=0D
Paulo Gadelha, president of the Fiocruz institute, which will produce the v=
accine, stressed that the technology received could also be used to help it=
 make other vaccines in future.=0D
=0D
He said his institute was already pledging to provide technology transfer t=
o make low-cost drugs and vaccines for African countries, in what could pro=
vide a challenge for large pharmaceutical companies.=0D
=0D
Mr Witty said "there has to be enough economic flow to encourage GSK to con=
tinue" developing vaccines for predominantly low- income countries.=0D
=0D