Brazil Moves Forward

Well, as expected, another country has joined Thailand in threatening to “break the patent” for Merck’s Efavirenz. Bloomberg has some reporting of the dispute, and it’s filled with sideways adjectives describing the dispute in a quite stilted way. But this is to be expected, after all someone is trying to buck the patent system which is part of TRIPS. Regarding Thailand’s initial efforts to negotiate a better price for Efavirenz, I had observed earlier that Dr. Mongkol Na Songkhla is amazingly stupid or, in the unthinkable alternative, the Financial Times is biased and it is clear that the unthinkable alternative is the one that is aligned with reality. So here we go again.

But the real bias in this reporting comes mainly from what is omitted, rather than what is said. For example, from this reporting it seems that Brazil just pulled the price of 65 cents a pill out of thin air when they were just asking for the exactly the same price Thailand is getting. You can think what you want about what Brazil is doing, but it is crystal clear that Bloomberg is withholding relevant information. There’s also some basic background missing, which I’ll supply from another source below the fold.

Brazil has several times before threatened this, but had always backed down at the last minute, after getting some change in the price of the drug in question. Thailand’s deal, however, was so compelling (65 cents a pill vs. $1.59 that Brazil was paying), that I doubt very much that Brazil will be the last country to try to get this price. For Brazil, which has made the commitment to give state-of the art anti-HIV medicines to all citizens who need them, this is a matter that will really affect public spending.

The only question in my mind is how fast the this wave of defections from the TRIPS IP regime will move. Who will be next? I suspect more countries from Latin America, as well as some from the former Eastern-Bloc.

Brazil Moves to Break Merck’s Patent AIDS Drug Use (Update1)

By Fabio Alves and Katia Cortes

April 25 (Bloomberg) — Brazil may break the patent on Merck & Co. AIDS drug Efavirenz unless the company agrees to slash its prices within the next seven days, Health Minister Jose Gomes Temporao said.

Yeah right, Bloomberg. Jose Gomes Temporao really said: “Slash your prices, or I’ll break your patent” Now I wasn’t there, but that version is very doubtful, because that’s not at all what is happening. First, Brazil is just asking for the same price that Thailand is getting. Also, the patent will not be ‘broken’ like the Unitied States government did to Bayer’s patent on aspirin during the First World War. Rather, the patent would be subject to mandatory licensing, with Merck getting a fee set by Brazilian law. So, here is my try at another way to describe the same events:

April 28 (Enigma_Foundry) Health minister Jose Gomes Temporao indicated that unless Brazil’s price for Efavirenz matched the price paid by Thailand, the price would be set as required by Brazilian Law, and in accordance with procedures specified by Brazil’s international treaty obligations.

Back to the story as written by Bloomberg:

Merck must lower its price for the drug to 65 U.S. cents a pill from $1.59, Temporao said. Merck has shown no sign of yielding on prices since negotiations began last year beyond its only offer of a 5 cent reduction, he said. Consequently, the government today declared the medicine “of public interest,” a first step toward buying an unpatented generic, he said.

“Brazil’s decision is based on our concern with the sustainability of our AIDS program” Temporao said at a news conference today in Brasilia. “Talks with Merck have been fruitless and their offer is unfeasible.”

Brazil, which provides free treatment to all AIDS patients, has almost doubled spending on medications for the disease to 960 million reais ($475.6 million) in the four years through 2006, paying Merck $42.9 million last year for Efavirenz, the principal drug in a 17-drug cocktail. Brazil, the Latin American country with the largest HIV-infected population, has pressured companies since 2001 to reduce prices of patented AIDS drugs.

Of course, the reporting by all of the press seems to paint the picture that Thailand and Brazil are ‘rogue’ states, acting outside of international laws. However, the fact really is that the USA acted alone, after 143 other countries drafted language which would allow broader use of mandatory licensing, in the production of generic drugs. That’s right: the USA vetoed the consensus from 143 other countries. Mandatory licensing means, of course, that the patent holder would still be entitled to some fees, just not the ones that they would like to charge. What was settled on allowed some use of mandatory licensing, but not as much as the other 143 countries wanted. Reported by Jim Lehrer News Hour:

Drug Patent Feuds
WTO talks in December 2002 aimed at resolving the issue broke down without an agreement over whether to allow poor nations to import cheap, generic drugs that they are not equipped to produce. Washington blocked a proposal the other 143 member countries participating in the negations backed out of concern it would allow poor nations to import cheap versions of drugs for non-infectious diseases such as cancer instead of simply helping them respond to AIDS and other epidemics.

“There is no way to sugar coat this bitter pill,” Sergio Marchi, the Canadian ambassador who chairing the TRIPS council, said. “We are disappointed…143 countries stood on the same ground, we were hoping to make that unanimous.”

After the talks ended, the Office of the U.S. Trade Representative issued a statement saying the U.S. could not support the resolution, because some countries in the negotiations had attempted to “expand the targeted ‘poor country epidemic’ focus of [the 2001 negotiations] to allow much wealthier countries to override a wide range of drug patents, for example, Viagra.”

This, the U.S. argued, would “seriously undermine the WTO rules on patents that provide incentives for development of new pharmaceutical products, including those to treat diseases of a non-epidemic nature.”
Critics of the U.S. position countered that Washington should not be allowed to define other countries’ public health priorities.

“We’re saying it is not the business of the WTO or trade representatives to identify what countries’ public health priorities ought to be,” Rachel Cohen, a spokeswoman for Doctors Without Borders, told the Hackensack, New Jersey newspaper The Record.

As the talks ended, Washington said it would not bring complaints against WTO members, such as Brazil and India, that export drugs for epidemics to developing countries.

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