Sunday, July 3, 2005

SAO PAULO, Brazil — AIDS activists and humanitarian groups are praising Brazil for taking the first step by any country to break an AIDS drug patent and produce copycat versions, a decision they hope leads to massive exports to other poor countries devastated by the disease.

But property rights advocates and the pharmaceutical industry are equating the nation’s high-stakes move against Abbott Laboratories Inc. as government-sanctioned piracy of intellectual property, driven by greed.

Brazil has forced manufacturers of AIDS drugs to reduce prices by issuing threats to break patents over the past several years, but made an unprecedented legal decision last week after it didn’t get the price cut it wanted from Abbott on its Kaletra pill.

Latin America’s largest country declared the outcome a public health crisis for its world-renowned free treatment program, and will use a World Trade Organization process to break the patent and clone Kaletra — unless Abbott gives a steep discount by Wednesday or lets Brazil make generic versions of the drug.

“The impact of breaking the patent would be enormous,” said Michael Bailey, a senior policy adviser for Oxfam International. “If a major country such as Brazil goes through with this, not only will it help ensure sustainability of their excellent treatment program, it will set a hugely important precedent for other countries.”

Poor countries without drug industries could take steps to authorize imports from Brazil, analysts said. Developing countries with robust generic drug production capacity — such as India and China — could be tempted to follow Brazil’s example, creating a bigger threat to the global reach of multinational pharmaceutical companies.

“The biggest result, I suspect, will be enormous pressure within India to do the same,” said Gary Hufbauer, an economist and trade analyst with the Institute for International Economics in Washington. “That would be quite a twosome.”

Critics contend that Brazil, where everything from illegally copied digital video discs to high-fashion clothing is sold at sidewalk stalls in cities small and large, is using sympathy for AIDS victims to set its sights on robbing profits from big pharmaceutical companies and giving them to smaller generic drug makers in Brazil.

“This is about stealing our intellectual property right and left and we’re going to have to do something about it,” said Robert Goldberg, a senior fellow at the Manhattan Institute for Policy Research, a conservative think tank in New York. “If this was Microsoft’s patents, there would be a firestorm.”

Brazil’s move toward breaking the patent comes just months before the United States will decide whether Brazil has done enough to crack down on copyright piracy and deserves to continue participating in the Generalized System of Preferences, a program that grants duty-free imports of products from designated countries. The United States is Brazil’s biggest export market.

Health Minister Humberto Costa says Brazil only wants to reduce the cost of its AIDS program and has no plans to profit from or export the drug. Brazil pays Abbott $107 million annually for Kaletra, and could reduce the cost to $54 million by copying the drug, Mr. Costa said.

The Health Ministry estimates that 600,000 of Brazil’s 182 million citizens are HIV-positive.

“Brazil doesn’t have a commercial interest in this, it’s a public health interest,” Mr. Costa said in an interview with the Associated Press. “From our part, there is no interest in breaking patents to export commercially.”

Abbott says it already provides the drug to Brazil at the lowest cost outside Africa and is working to negotiate a solution with Brazil. But the company insists the country does not have a legal basis to issue a compulsory license, the first step toward breaking the patent under WTO rules.

AIDS activists, however, say, that is just what the WTO envisioned two years ago when its member countries approved a way for patents to be broken when developing countries can’t afford the prices charged by drug companies.

“We are the hostages of these companies, and compulsory licensing is a defense against the abuse of monopolies,” said Jorge Beloqui, the leader of a Sao Paulo-based AIDS support group.

If Brazil breaks the patent, Mr. Beloqui said, activists will pressure Brazilian politicians to go a step farther and let its generic drug makers produce much more of Abbott’s drug so it can be shipped around the world to needy patients.

“These medicines are essential to the world, and I think Brazil should sell them,” he said.

But breaking the patent would send a dangerous signal to big pharmaceutical companies that have invested heavily in Brazil, said Eric Noehrenberg, director of international trade and market issues with the International Federation of Pharmaceutical Manufacturers and Associations.

“Companies are looking very hard at their presence in Brazil in light of these circumstances,” Mr. Noehrenberg said. “Could they pull out? It’s always an option.”

• Associated Press Writer Vivian Sequera contributed to this story from Brasilia, Brazil.

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