Brazil Breaks Patent On A Merck Drug

Merck & Co. says it is "profoundly disappointed" by Brazil's decision to break the patent on a key AIDS drug made by the U.S. pharmaceutical giant and buy a less expensive generic version of the medicine from India.

On May 4, Brazilian President Luiz In??cio Lula da Silva signed a decree authorizing his country's Ministry of Health to issue a "compulsory license" for efavirenz, a move that allows a country to manufacture or import generic copies of patented drugs while paying the patent holder only a small royalty.

Lula acted shortly after the Brazilian government rejected Merck's offer to reduce its price for efavirenz, sold as Stocrin, from $1.59 per pill to $1.10. Brazil wanted to purchase the drug at the same 65 cents per pill that Merck charges Thailand.

Lula said rules established under a World Trade Organization agreement signed in 2001 allow developing countries to issue compulsory licenses to combat public health emergencies. "The compulsory licensing of efavirenz is a legitimate and necessary measure to guarantee that all patients have access to the drug," he said.

Brazil has been pushing for lower drug prices to limit the cost of a government-run program that provides free medicines for people infected with the AIDSHIV virus. Efavirenz is used by 75,000 of the 180,000 Brazilians who receive AIDS drugs through the program, according to the Ministry of Health.

Merck is urging Brazil to reconsider its decision and is calling for further negotiations. But the company also defends its pricing practices, asserting that Brazil has a greater ability to pay for AIDS medicines than other countries that are poorer or harder hit by the disease.

"We believe it is essential to price our medicines according to a country's level of development and HIV burden," the company says. "R&D-based pharmaceutical companies simply cannot sustain a situation in which the developed countries alone are expected to bear the cost for essential drugs in both least developed countries and emerging markets."

The Brazil's breaking of the U.S. drug maker's patent could damage relations between Brazil and with the U.S., which has criticized Brazil in the past for not doing enough to protect intellectual property. Thailand overrode patents on several AIDS drugs earlier this year, including those made by Abbott Laboratories and Merck. Thailand's action prompted, prompting the Office of the U.S. Trade Representative on April 30 to place Thailand on its "priority watch list" for copyright violators.