Abbott Gets Brazil Ultimatum: Lower AIDS-Drug Price or Lose Patent

Brazil’s Ministry of Health has declared the anti-retroviral drug Kaletra (Lopinavir/ritonavir), manufactured by Abbott Laboratories, to be of public interest.

As such, the Brazilian government will adopt obligatory licensing of the medication, in the case that the manufacturer does not provide the necessary requirements to guarantee the sustainability of the National STD/AIDS Program.

An official notice sent this Friday to the Laboratory opens the door for the company to express its opinion on whether it will address this situation in the public’s interest.

The Laboratory will have 10 days from receipt of this notice to inform the Brazilian Ministry of Health that it is prepared to reduce the sales price of Kaletra to national production levels. Its agreement will prevent the adoption of obligatory licensing.

With the licensing, the government will be able to allow Farmanguinhos Laboratory, from Fiocruz, to produce the medicine for exclusive public, and not commercial, use.

This measure is necessary to maintain the sustainability and the quality of the National STD/AIDS Program, which is responsible for guaranteeing life for close to 170,000 Brazilians this year.

With the declaration of public interest, says the Health Ministry, the Brazilian government is applying the flexibility laid out in international norms and Brazilian legislation, without breaking a contract.

The Ministry of Health is basing its adoption of the licensing on the TRIPs Accords (Trade-Related Aspects of Intellectual Property Rights), the Doha Declaration, and Patent Law (1997) and Decree 4.830/03.

The Brazilian National STD/AIDS Program is a worldwide benchmark for treatment of HIV carriers and has as its goals the universal and free access to all resources available for the treatment of the disease, and for prevention and diagnosis at public hospitals.

The number of patients using anti-retrovirals in Brazil has risen from nearly 36,000 in 1997 to 170,000 today. Between 2004 and 2005, more than 20,000 people participated in the Program.

There are 15 types of anti-retroviral medications that are distributed free of charge. Kaletra was introduced in 2002 and is prescribed for patients who have already developed resistance to other medications.

To guarantee the use of the latest generation anti-retrovirals on all people, the Ministry of Health has increased by 50% the resources dedicated to the program, which started in 2004 at 620.9 million reais, and in 2005 were increased to 945 million reais (US$ 393.9 million).

Of this sum, almost one third (257 million reais) will be used solely for the acquisition of Kaletra.

The projection is that in 2008, close to 215,000 people in Brazil will need the cocktail, which means a budget of 1.25 billion reais (US$ 520.8 million), with one third of this amount being earmarked for the purchase of Kaletra.

According to Brazil’s health officials, investment increases to maintain the National STD/AIDS Program have been constant. But in the last four years, Brazil has increased investments by 77%, while the number of patients has gone up by 43%.

It is estimated that 600,000 Brazilians carry the HIV virus. There are even more who do not know that they are infected, and will need to be treated in the upcoming years.

“Brazil is concerned about doing a good job of treating those Brazilians who need it, with the proper medication, and with updated treatment measures. It is a matter of public interest,” explains Minister Humberto Costa.

To guarantee delivery of the ideal medicine to each one of the carriers registered in the program, the Ministry of Health must acquire the latest generation medications.

Beginning to be distributed, for example, is Enfuvirtida, which belongs to a new class of anti-retrovirals, at a cost of 19,000 reais/month (US$ 7,900 per patient). A total of 1,200 patients are currently signed up to be treated with this new medication.


In March, the Ministry began negotiations for voluntary licensing with Abbott Laboratories, Gilead Science Incorporation, and Merck Sharp & Dohme.

The medications produced by these laboratories – Kaletra, Efavirenz (Merck) and Tenofovir (Gilead) – make up 66% of the entire budget for the purchase of anti-retrovirals.

Negotiations with Merck and Gilead continue. Abbott was the only one to oppose both the alternative voluntary licensing as well as a price reduction, which guarantees the future sustainability of the program.

Since the medication arrived in Brazil in 2002, its price has been reduced by 25% – a percentage that is considered to be low in global terms – because development costs diminish over the years.

Today, the unit price of Kaletra is US$ 1.17 in contrast to its price of US$ 1.60 in 2002, and US$ 0.72 for its generic version. However, in this period, the government costs for the purchase of the medication have gone up from US$ 35.2 million to US$ 91.6 million annually.

This is due to the fact that the number of patients who need the medication in Brazil has increased threefold per year. In 2002, there were 3,200 people who needed it. This year, there will be 23,400.


The Ministry of Health’s initiative, say Brazilian authorities, is backed by national and international norms and respects the rights of private companies to make a profit from their inventions.

Article 71 of Brazilian patent law (Law 9.279/96) provides for obligatory licensing in the case of public interest. Decrees 3201 of 1999, and 4830 of 2003, also consider those items related to public health to be of public interest.

The Doha Declaration (Catar) in 2001 allows countries to take measures to protect public health. Those measures, according to the Declaration, do not compromise the TRIPs Agreement, which established minimum rights over intellectual property.

Should Abbott Laboratories not follow the Ministry’s notice, the medication will be produced in Brazil exclusively for national consumption.

Although the obligatory licensing gives Brazilian laboratories the right to produce Liponavir/ritonavir, it does not prevent Abbott from commercializing Kaletra in the country.

National Production

With the obligatory licensing, the Institute of Pharmaceutical Technology (Farmanguinhos Laboratory), of the Oswaldo Cruz Foundation would produce the Lopinavir/ritonavir medication while reducing by the current price by almost 50%.

Within one year, Farmaguinhos would be able to produce six million capsules/month, the necessary amount to meet domestic demand. The unit price for the medication should be around US$ 0.68, which would add up to approximately R$ 130 million/year for the National Program.

Farmaguinhos is the largest official laboratory in Brazil and already produces more than 60 medicines, among them anti-virals.

Last year, the Brazilian government invested US$ 6 million in the acquisition of the GlaxoSmithKline industrial park in Rio de Janeiro in order to convert it into the Medicine Technology Complex (CTM) for Farmaguinhos. The CTM will produce 10 billion pharmaceutical units in 2007.

The Program

Since 1986, the National STD/AIDS Program has guaranteed 100% free treatments to Brazilians with HIV/AIDS. Since the program started, the life expectancy of persons with AIDS has increased twelve-fold, from five months to 58 months.

Mortality has dropped 50% and the number of pregnant women suffering from the disease who have access to AZT, which helps prevent infection of the newborn, is on the rise.

This year, the Ministry of Health will finance 754 disease-fighting projects run by NGOs with a budget of 60 million reais.

In 2001, UNESCO (United Nations Educational, Scientific, and Cultural Organization) presented an award to the Brazilian program in the category of Human Rights and Culture of Peace.

Last year, the quality of the Brazilian AIDS Program received one more international award: a medal from the U.N. AIDS Program (Unaids) for the leadership that Brazil has exerted in improving the fight against the epidemic.

Brazil has participated in an international HIV and AIDS cooperation program since 1995. Today, 25 countries are involved in that work, which includes prevention, assistance and treatment, epidemiological monitoring, project management, sexually transmitted diseases, human rights, and cooperation with private sector organizations.

Ministry of Health of Brazil –


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