The Boston Globe
WASHINGTON - Brazil successfully used a trade law as leverage to win a sharp price reduction yesterday for a key anti-AIDS drug, setting a precedent that could benefit AIDS patients throughout the developing world.
Negotiations with the Swiss drug giant Roche yielded a 40 percent drop in the price of nelfinavir, and Brazil's health minister, Jose Serra, said the tactics Brazil used could be employed by other developing countries struggling to make expensive patented drugs available to millions of AIDS patients.
Last week, Brazil threatened to issue a compulsory license that would allow it to produce its own generic version of the patented Roche drug, the first time any developing country had announced plans to use that tool.
Under international trade laws, developing countries can issue the licenses by declaring a national emergency, but governments have been hesitant to do so, in part because of pressure from wealthy countries that want to protect intellectual property rights.
"Pharmaceutical companies have to realize that pricing should be different for developing countries," Serra told reporters in Brazil. "Our resources are tight. This is a victory for sick people."
Roche officials were not immediately available for comment. They had expressed surprise at Brazil's threat, saying that they believed negotiations were still underway. Other officials at pharmaceutical companies had called Brazil's move a bargaining ploy and wondered why Brazil did not seek bids from Roche's competitors on alternative AIDS drugs that could be used to produce a different AIDS cocktail mix.
Roche had offered a 17 percent reduction in the price of nelfinavir. The 40 percent reduction means Brazil will save $35.4 million beginning next year.
But the impact of the deal, said AIDS activists yesterday, could go far beyond Brazil.
"This is a morality play of relying upon drug company solutions," said Asia Russell of the Health Gap Coalition, a group fighting for affordable AIDS treatment and access. "If the play concluded on what Roche said was its final offer several months ago, then more Brazilians would be left without drug access. You can extrapolate that to other countries as well. If they are forced to deal with a drug company's best offer, they will have a hidden card."
That card is the threat of issuing a compulsory license. In Brazil's case, a Rio de Janeiro factory could have made the drug at a 40 percent cost reduction, but under trade laws Brazil would have to reimburse Roche up to 15 percent in royalties.
The impact may be felt in several African countries that have issued patents on AIDS medications. Of 15 AIDS drugs, 11 are patented in South Africa, according to a study by researchers from Harvard and the International Intellectual Property Institute, a Washington- based nonprofit organization. The popular double-combination drug combivir is under patent in 37 African countries.
In much of Africa, however, there are few patents on AIDS drugs. The ongoing study has found that only 16 percent of the potential patents have been filed in Africa, mostly because manufacturers believed the potential market would be too small to justify the expense and effort of a patent in impoverished countries with minuscule health budgets. But even those few patents cover drugs that could benefit millions of people infected with AIDS, including 5 million in South Africa.
Despite its significance, the deal in Brazil yesterday may have little effect in the face of the huge task of providing treatment to HIV-infected people in Africa.
Brazil is rich compared with most of the countries where the disease is an epidemic. It delivers the medicines free to about 100,000 patients. In all of Africa there are fewer than 100,000 people under treatment; one industry study found that the number being treated is closer to 20,000.
Those numbers, though, do not reflect changes afoot in in countries such as Botswana, Nigeria, Uganda, and Malawi, among others, which are planning to sharply extend AIDS prevention and treatment programs. Nor do the figures reflect the sudden rise in prominence of a global AIDS initiative, including a fund that has drawn nearly $1.4 billion in pledges.
Analysts said yesterday that Brazil serves as an inspiration to committed governments in Africa.
But James Love, one of the most active participants in the battle to reduce the prices of AIDS drugs to poor people, wished yesterday that Brazil had not struck a deal, arguing that the country would have done better by developing a generic industry that would make copies of AIDS drugs.
"I think Brazil screwed up," Love said. "Whatever it cost to produce it today isn't going to be what it's going to cost tomorrow. They have locked themselves in to a deal. They basically backed off because of pressure of what it could do for investments in Brazil."
There was no word of that in Brazil yesterday. Health Minister Serra said the deal was "advantageous for the country." Now, said activists, the question is whether other developing countries find the deal advantageous for them.
John Donnelly can be reached by e-mail at donnelly@globe.com.