Amid ‘Increasingly Bitter’ Dispute, WTO Reviews Legality of Brazil’s Generic Drug Law

Brazilian officials announced Friday that they may begin manufacturing two additional AIDS drugs by June if prices on patented imports do not come down, a move that comes in response to a U.S. request that the World Trade Organization set up a panel to review the legality of a Brazilian law that allows the nation to produce generic HIV/AIDS drugs, the Washington Post reports. The "increasingly bitter trade dispute" is part of a larger campaign by developing nations to get pharmaceutical companies to lower the prices of antiretroviral drugs. Several countries, including Brazil, India and South Africa, are producing or preparing to produce generic versions of the patented drugs, which cost 80% to 90% more than the generic equivalents. The current debate began in May when the U.S. delegation to the WTO complained about a provision in Brazilian patent law that says "a foreign company must forfeit patent rights to a product after three years if the company does not begin to manufacture the product in Brazil during that time." The United States, arguing that the law violated international trade rules, requested on Jan. 8 that WTO review the law through a review panel, similar to trade court, and issue a ruling, which will come in June at the earliest (Buckley, Washington Post, 2/6).

Cheaper is Better
The two drugs that Brazil has threatened to make, nelfinavir and efavirenz, are currently patent-protected and are the "most expensive" drugs available to treat HIV infection. By manufacturing generic forms of eight of the approved HIV medicines, Brazil has caused the price of treatment for an HIV-positive individual to "plummet" more than 70% to $4,500 annually, compared to $12,000 in the United States (Reuters/Contra Costa Times, 2/3). Paulo Teixeira, head of the Brazilian Health Ministry's AIDS program, said, "The prices of these drugs are beyond the realm of this world. What we desperately need is a global negotiation over the prices of these medicines" (Washington Post, 2/6). Teixeira added that the government is "open" to negotiation and would "prefer" to reach an agreement, but will begin manufacturing the drugs if the prices are not lowered by June because their "primordial goal is to guarantee that there won't be an interruption in the universal distribution of medicines" (Reuters/Contra Costa Times, 2/3).

Brazil as Role Model
Patent law experts and AIDS activists say that "the symbolic and political weight of the U.S. challenge may be more important than its legal or practical ramifications," according to the Post. James Love, director of the Consumer Project on Technology, a Washington, D.C.-based consumer group, asked, "Why hassle Brazil?" answering, "Because they're going around touting their model ... and the big drug companies are going ballistic because of that" (Washington Post, 2/6). Brazilian officials said that the U.S. challenge to the generic drug manufacturing law "puts at risk" Brazil's "world-renowned AIDS program," and Doctors Without Borders called on the United States to withdraw the complaint, arguing that it could "handicap" the Brazilian initiative. But U.S. officials "strongly denied" that their hearing request would "jeopardize" the program, saying that the request "is in no way contrary to Brazilian policies to improve access to medicines, including those destined to the treatment of AIDS/HIV" (Reuters/Contra Costa Times, 2/3). According to the officials, "Washington's only concern is what they describe as the protectionist part of Brazil's patent law." A U.S. Embassy official in Brazil said, "We're not attacking the Brazilians. This is really about a specific portion of law, and the question is: Who owns the patent?" (Washington Post, 2/6).

Testing TRIPS
U.S. officials added that the Brazilian statute violates the WTO's Trade-Related Aspects of Intellectual Property Rights agreement by requiring that "all patents, regardless of who owns them or who funds their creation, be subject to compulsory license unless locally manufactured." The WTO's decision "paves the way for neutral arbitration" by the Dispute Settlement Body, composed of "global trade watchdogs" from the 140 member states. This case tests, "for the first time," an exception to the TRIPS agreement that allows countries to grant "compulsory licensing" in order to "skirt global patent rules when a national emergency is involved" (Nebehay, Reuters, 2/1). If the WTO rules in favor of the United States, however, U.S. officials say that WTO's rules "allow countries to manufacture generic equivalents of patented medicines in case of a national emergency." And Brazil "has asserted that," with AIDS once threatening to "cripple the working-age population," the epidemic is a national emergency (Washington Post, 2/6).