June 28, 2005

US monitoring Brazil plan to break AIDS drug patent

WASHINGTON (Reuters) - The United States is keenlyfollowing Brazil's plan to break a patent held by a U.S. drugcompany to cut treatment costs for the country's tens ofthousands of AIDS sufferers, a U.S. official said on Tuesday.

"We are monitoring this latest development closely throughour embassy in Brasilia and here in Washington," a U.S. tradeofficial said, without commenting on whether the United Stateswould challenge Brazil on the issue.

"We will maintain our communication with the government ofBrazil and our industry. The U.S. has been a leader, not onlyin developing innovative drugs, but also in making surecountries have the tools within the rules to combat healthcrises," the official added, speaking on condition he not beidentified.

Brazil has announced it will break a patent on AbbottLaboratories Inc.'s anti-retroviral drug Kaletra to provide acheaper generic version for its treatment program.

It would be the first time any country has broken a patentin order to produce an anti-AIDS drugs. Brazil says itsstate-owned lab could make the drug for 68 cents a pill, lessthan the $1.17 each the government pays Abbott.

At a news conference in Geneva on Monday, Brazilian HealthMinister Humberto Costa argued the move was "totally legal"under World Trade Organization rules.

Brazil was taking the step after Abbott had refused togrant a voluntary license to manufacture Kaletra, Costa said.

The order, the first issued by Brazil in a long-runningtussle over pricing between developing countries andmultinational companies producing drugs used in AIDS treatment,will go into effect within 10 days, Costa said.

Kaletra is one of three ARVs made by Abbott and two otherU.S. firms on which Brazil will this year spend $250 million,63 percent of its AIDS budget, to treat some 180,000 sufferers.

WTO rules give member countries discretion to protectpublic health by issuing compulsory licenses allowing themanufacturing of patented drugs.

Mark Grayson, a spokesman for the Pharmaceutical Researchand Manufacturers of America, questioned whether Brazil facedan emergency that justified breaking the patent.

Statistics show its spending on AIDS drugs has declinedover the past five years, he said.

"As a policy matter, threatening to break patents doesn'tsolve the AIDS problem," Grayson said.