Roche Requests Meeting With Brazilian Health Minister to Continue Price Negotiations for Nelfinavir

The pharmaceutical company Roche has asked to meet with Brazilian Health Minister Jose Serra to continue price negotiations for Roche's patented version of the anti-AIDS drug nelfinavir, which Brazil plans to produce locally in generic form, the New York Times reports (Petersen/Rich, New York Times, 8/24). Brazil announced Wednesday that it will issue a compulsory license to produce a generic copy of nelfinavir, which is marketed by Roche under the brand name Viracept, after price talks with the pharmaceutical company "ended in deadlock." 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. Nelfinavir is the most costly drug purchased by Brazil for its AIDS program, with the country spending approximately $88 million per year to import it. The Brazilian government estimates that domestic production of nelfinavir would save the government $35 million -- 40% of the drug's cost -- each year (Kaiser Daily HIV/AIDS Report, 8/23). Roche executives said yesterday that they were "surprised" at Brazil's decision to "break the patent" on nelfinavir (New York Times, 8/24). Roche spokesperson Daniel Piller said that the company is "very close to reaching an agreement ... on a further, additional discount" for nelfinavir (Darlington, Reuters/Boston Globe, 8/24). Piller noted that Roche already sells Viracept in Brazil for half of its U.S. wholesale price and that the company provides a pediatric version of the drug for free (Astor, AP/Philadelphia Inquirer, 8/24). Roche has also said that it plans to begin locally producing nelfinavir in Brazil next year, which "may help to further reduce the price."

Brazil's Reaction
Serra said he would "listen to" Roche's new proposals for price cuts, but added that he feels the company is simply "trying to delay the government from getting its laboratory prepared" to make nelfinavir (New York Times, 8/24). Paulo Teixeira, director of Brazil's AIDS program, said that since local production of nelfinavir is expected to cut the price of the drug by 40%, Roche would have to offer a 40% discount "at the very minimum" (Reuters/Boston Globe, 8/24). Serra said that even if Roche agreed to cut the price of Viracept by 40%, "it would not be enough to stop the government from breaking the patent." But Shannon Herzfeld, senior vice president at the Pharmaceutical Research and Manufacturers of America, said that "there is still time" to reach an agreement on the price of nelfinavir because international trade laws state that a country must show that a drug firm is "not making a good-faith effort to make its medicine available" before issuing a compulsory license. Herzfeld said that Brazil "will not be able to try to make that claim" until January, since the price negotiations between Roche and Brazil pertain to nelfinavir that is to be bought for the year 2002 (New York Times, 8/24).

Snowball Effect
Meanwhile, observers said that Brazil's decision to locally produce nelfinavir "could open the way for other developing countries to follow suit" (AP/Philadelphia Inquirer, 8/24). Richard Evans, an analyst with Bernstein Investment Research and Management, said that if Brazil issues a compulsory license to produce the drug, "it could affect the entire brand-name drug industry." He added, "This is a little snowball at the top of a very big hill. This is not so much about today's earnings as it is about tomorrow's prospects for making profits in developing countries." But Hemant Shah, an independent drug stock analyst, said that he feels Brazil's decision will "have little effect on the industry overall," adding that the pharmaceutical industry's "bigger risk" would lie in Roche "pushing too hard" to keep Brazil from manufacturing the drug. "Roche is a very aggressive company. The more it fights, the more the possibility that this will spill into other drugs," he said (New York Times, 8/24).

Brazil's Effort 'Justifiable,' Editorial Says
A Boston Globe editorial calls Brazil's decision to break the patent on nelfinavir "a risky step that could prompt sanctions" against the country, but one which is "justifiable as part of the country's heroic efforts to control" HIV/AIDS. The editorial states that Brazil and Roche are likely to reach an agreement on the price of nelfinavir before the government begins to distribute the generic drug in February. In the interim, "it would be a mistake for the United States to threaten sanctions against Brazil," the editorial states, concluding, "At a time when so many nations in Africa and elsewhere are looking for a model of how to deal with AIDS, Brazil provides one. If that model requires hardball dealing on drug prices, so be it" (Boston Globe, 8/24).