Brazil Intends to Break Patent on Roche’s Nelfinavir to Produce Drug Locally

Brazil announced yesterday that it will issue a compulsory license to produce a generic copy of nelfinavir, which is marketed by drug maker Roche under the brand name Viracept, after price talks with the pharmaceutical company "ended in deadlock," the New York Times reports (Rich/Petersen, New York Times, 8/23). Brazilian Health Minister Jose Serra said that the government-owned laboratory Far-Manguinhos "is set to produce nelfinavir by January with or without ... consent" from Roche. Brazilian patent law allows the country to issue a compulsory license for domestic production of internationally patented drugs during "national emergencies"; the Brazilian government has said that it plans to declare AIDS a national emergency and enact the provision. "[W]e must insist that lives come before profits. On that, there can be no compromise," Serra said (Faiola, Washington Post, 8/23). Nelfinavir is the most costly drug purchased by Brazil for its AIDS program (Jordan, Wall Street Journal, 8/23). Brazil currently spends $88 million per year to import nelfinavir, an expenditure that accounts for 28% of the government's annual AIDS budget. "It's ridiculous that one of the 12 [antiretrovirals] would account for more than 25% of the cost. We spend more on that one drug than on all of the transplants performed in Brazil each year," Serra said. The Brazilian government estimates that domestic production of nelfinavir would save the government $35 million -- 40% of the drug's cost -- each year (New York Times, 8/23). Serra said that the government would still pay Roche "some royalties" on the drug even if it was being produced domestically (Washington Post, 8/23). A spokesperson for the Health Ministry said that laboratory tests are underway on a generic copy of nelfinavir and that the government plans to launch "full-scale distribution" of the drug in February.

Price Negotiations
Roche and the Brazilian government had negotiated on price reductions for the drug for six months but were unable to reach an agreement. The Wall Street Journal reports that Roche offered to cut the price of nelfinavir by one-third, but Brazil "demanded" a 40% reduction. Roche said in a statement that it "is surprised" by Brazil's decision to produce the drug domestically because "negotiations between the company and the health ministry have been friendly." The company added that it had "already conceded discounts close to those requested by the ministry." Serra said that he has not "ruled out further negotiations" with Roche (Wall Street Journal, 8/23). The Washington Post reports that some observers characterize the government's move as "a ploy to bring [Roche] back to the negotiating table." In March, Merck & Co. "bowed to pressure" and cut prices on two AIDS drugs for Brazil by 65% and 59% rather than "face possible competition from generics."

No U.S. Opposition Expected
Some observers have questioned whether the United States will oppose Brazil's decision to locally produce nelfinavir, the Washington Post reports (Washington Post, 8/23). In May 2000, the United States "complained" about Brazil's patent law to the World Trade Organization and asked the WTO to review the law (Kaiser Daily HIV/AIDS Report, 8/21). However, the United States -- which later dropped its complaint -- was primarily concerned with a provision in the patent law that allowed Brazil to produce generic drugs if companies "did not begin producing the drugs in Brazil within three years of patent." The Post says that in the past, U.S. officials "have not taken issue" with the separate patent law provision that allows Brazil to issue compulsory licenses during national emergencies. Serra said, "We have not consulted with the United States on this, but we believe their past position indicates to us they will not now be against our decision." The Post reports that a U.S. official "familiar with the issue" said that Brazil's decision would "have to be studied before official comment would be issued," although the official agreed that the United States "had not previously objected to the production of nelfinavir under Brazil's national emergency law" (Washington Post, 8/23).

An Inspiration to Others?
The New York Times reports that if Brazil "goes through" with its decision to produce nelfinavir, it will mark "the first time that the government of a poor country has decided to allow generic copies of a brand name drug to be made without the permission of the company that owns the patent." Some AIDS advocates and consumer groups say that Brazil's decision will likely inspire other "poor countries" to "follow suit." James Love, director of the Consumer Project on Technology, a consumer advocacy group that focuses on intellectual property rights and health, said, "This has never been done in a poor country. This will motivate people" (New York Times, 8/23). Paul Davis of ACT UP/Philadelphia added, "Brazil has served as a crowbar to put a crack in the dam of enforcing international patent agreements" (Donnelly, Boston Globe, 8/23). The Washington Post reports that Brazil "is emerging as the world leader in the crusade to break down ... 'the AIDS monopolies' held by large, foreign pharmaceutical companies" (Washington Post, 8/23). Brazil estimates that it has saved approximately $500 million in the last four years through domestic production of AIDS drugs, manufacturing eight of the 14 antiretrovirals currently available. However, Brazilian officials say that the country will likely need to import more patented medicines as the population begins to experience more drug resistance and treatment failure (Wall Street Journal, 8/23).