Access to Medicines in Brazil:

Interference by the United States

In May 2007, Brazil issued a compulsory license that authorizes the purchase of lower-cost generic versions of the AIDS drug efavirenz (brand-name Stocrin, Sustiva in the United States). This move was a crucial step to help the country maintain its gold-standard program to treat people with HIV/AIDS, the viability of which is threatened by the high prices of newer second-generation drugs.

Second-generation drugs are necessary tools for treating AIDS because many patients become naturally resistant to first-generation drugs over time. The growing numbers of patients that will require these newer drugs are posing a threat to the viability of treatment programs in Brazil and globally.

The cost savings generated by the introduction of generic competition for efavirenz will assist Brazil in managing these increasing costs and maintain its policy of providing AIDS treatment to all who require it.

Brazil unable to secure sufficient price cuts from Merck

Brazil undertook extensive negotiations with Merck, the co-holder of patent rights for efavirenz prior to issuing the compulsory license. Merck offered an 8 percent price reduction (from $580 per patient per year to $551). Nine days before issuing the license, Brazil gave notice that it would issue the compulsory license unless Merck reduced its price by 60 percent (to $220 per year) within a week. Only then did Merck offer a more significant price cut of 30 percent (to $400 per year). Brazil rejected this offer and issued the compulsory license shortly thereafter, noting that it could purchase a generic version of efavirenz for as little as $165 per year, which would result in estimated cost savings of $30 million in 2007 alone.

Brazil’s action came after years of price negotiation with Merck, which led to incremental improvements but kept the price of efavirenz far above the best generic price. As efavirenz has become more important in Brazil’s AIDS treatment program, these higher prices have become unsustainable.

Brazil’s action necessary to maintain model National AIDS Program

UNAIDS considers Brazil’s AIDS treatment program, which provides free treatment to all, to be one of the best and most successful in the developing world. But it faces serious price pressures.

In 1999, only 2,500 of Brazil’s AIDS patients used efavirenz, the patent for which runs until 2012 in Brazil. Today, Brazil supplies the drug to almost 65,000 of the 170,000 receiving treatment because efavirenz has a much better side effect profile than alternative medications.

More and more patients in Brazil will require efavirenz in the coming years. That’s because, first, the number of AIDS patients in Brazil is expected to grow. In addition, growing numbers of patients will naturally become resistant to the first-generation treatments over time, necessitating a shift to the more expensive second-generation drugs. This is a major threat to AIDS programs in Brazil and globally in coming years.

By issuing the compulsory license and purchasing generic versions of efavirenz at significant cost savings, Brazil is demonstrating its serious commitment to the continued provision of lifesaving HIV/AIDS drugs to all citizens who need them.

Brazil’s action will benefit the entire developing world

Brazil’s move will not only allow the country to sustain its domestic AIDS treatment program, it will also have important global benefits. Brazil's substantial market will help create economies of scale for generic versions of efavirenz and should push prices down much further. Lower generic prices will benefit other developing countries and donor countries such as the United States, which are seeking to maintain and expand AIDS treatment programs as the pandemic grows and increasing numbers of patients require the more expensive newer treatments.

Brazil’s action was legal

Brazil's issuance of a compulsory license is legal under its national law and under international law. The World Trade Organization's (WTO) Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) authorizes compulsory licensing in circumstances of a country's choosing. Brazil’s actions have also been endorsed by President Bill Clinton, Doctors Without Borders, UNAIDS and many other public health and development advocates.

USTR pressures Brazil for merely considering compulsory licenses

Despite the legality of issuing compulsory licenses, the United States Trade Representative (USTR) expressed concern that Brazil had “indicated consideration of the use of compulsory licenses on patented pharmaceutical products” in the 2007 Special 301 Trade Report (drafted before Brazil issued its compulsory license). Given that the United States is a signatory to the Doha Declaration on the TRIPS Agreement and Public Health, which expressly authorizes the use of compulsory licenses to promote access to medicines, it is not appropriate for USTR to describe Brazil’s consideration or issuance of compulsory licenses for medicines as evidence of insufficient commitment to intellectual property rights.

For more information contact: Sarah Rimmington at srimmington@essentialinformation.org or (202) 387-8030.