Pressure Rises On Drug Patents In Brazil

Brazil, a developing country leader on international intellectual property issues, has come under pressure at home and abroad over whether to lift domestic patents on foreign pharmaceuticals for AIDS to allow cheaper generic versions to be produced.

This week, nearly 200 non-governmental organisations from around the world signed onto a letter urging the Brazilian government to issue compulsory licenses allowing domestic pharmaceutical companies to produce anti-retroviral drugs used against HIV/AIDS.

“We fail to understand the lack of action by the Brazilian authorities,” the groups wrote, while noting that Brazil has been a champion of poor consumers in international debates. “Still, when it comes to taking action at home, Brazil turns out to be a tiger with no teeth.”

But issuing compulsory licenses is generally unfavourable to the U.S. companies that hold the rights to those drugs, and those companies have the ear of the U.S. government, which is working to hold Brazil in check through several ways.

In recent months, Brazil, along with Argentina, has found itself on opposite sides from the United States – and the object of procedural maneuvering — on a number of issues at the World Intellectual Property Organisation. The Southern Cone countries proposed a Development Agenda at WIPO last fall that has polarised the Western Hemisphere. In recent weeks, the United States was joined by northern neighbors Canada and Mexico in working to alter that proposal, which is under consideration until next fall.

Then, two weeks ago, during wrangling over WIPO’s budget, Brazil ended up caught in a position it did not choose and was subsequently said by U.S. officials to have opposed WIPO’s budget, according to a Brazilian official.

Brazil also gains credit as a leader in the fight at the World Trade Organization for developing countries to be able to use the flexibilities negotiated into the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), a position that frequently puts it opposite the United States. The flexibilities allow, among other things, countries to bypass patents to address important public health needs. This was a point seized on by the non-governmental groups, who said in the letter, “The flexibilities in patent law are designed to give governments the tools to act.”

The two countries also have long locked horns as the north-south counterweights in the stalled negotiations for a Free Trade Area of the Americas, originally scheduled for completion at the end of 2005 under their joint chairmanship. A renewed attempt to restart those talks by holding U.S.-Brazilian discussions is being planned, according to sources.

One of the biggest potential threats the U.S. holds over Brazil is its participation in the U.S. Generalized System of Preferences, under which developing countries are unilaterally offered beneficial trade access to the U.S. market. The Office of the U.S. Trade Representative concluded a review of Brazil’s GSP benefits two weeks ago with a decision to extend the review to 30 September. While Brazil trades more with Europe than with the United States, its trade with the hemisphere’s heavyweight is significant. In addition, some U.S. industry groups are pressuring the Bush administration and the U.S. Congress to take action against Brazil’s GSP benefits due to copyright piracy and other issues.

The piracy issue this year also landed Brazil (and Argentina) again on USTR’s “priority watch list” of countries it considers to be the biggest violators of U.S. intellectual property rights. The annual Special 301 report was issued on 29 April and could ultimately lead to sanctions against cited countries.

The Washington Times, a conservative U.S. newspaper, ran a piece criticizing Secretary of States Condoleezza Rice for failing to hit Brazil harder on these issues during her visit there last month. It was later revealed by non-profit groups that the author of the piece is linked with the U.S. drug industry.

Time To Act?

In the letter received by Brazilian Health Minister Humberto Costa a week ago, the organisations said that over the past four years, Brazil has a number of times said it was ready to issue compulsory licenses for anti-retroviral drugs used in the government’s AIDS programme. But it has not done it, despite 70 percent of the programme budget being spent on the purchase of four imported, patented drugs.

Overall, 80 percent of the budget is spent on imported medicines, even though the capability to produce all of the needed medicines exists in Brazil, it said.

Scrutiny over the issue has heightened in recent weeks since negotiations to obtain a voluntary license began on 15 March between Costa and the producers of three key drugs. A voluntary license would pre-empt the need for a compulsory license. The companies are Abbott Laboratories, Gilead and Merck, and their products, Lopinavir/Ritonavir, Tenofovir, and Efavirenz, respectively.

According the letter dated 5 May, the minister set a deadline for an agreement with the companies that slipped by three weeks ago. If the deadline was not met, the government was expected to move ahead with a compulsory license, and the companies would receive the royalties in either case.

According to Michel Lotrowska of Medécins Sans Frontières in Brazil, civil society groups are prepared to consider a voluntary license arrangement even though they are usually less favourable to consumers than compulsory licenses and can take a long time to enter into effect. The objective of negating companies’ patents in a health emergency, he said in an interview, is to lower the price and transfer the know-how to make the drugs.

“The voluntary license doesn’t seem to be voluntary in this case, so we have to wonder what kind of deal” is being negotiated, Lotrowska said. Meanwhile, in the past few weeks, press reports in Brazil have carried bitter exchanges between government officials and non-profit group representatives.

Lotrowska also sought to clarify the perception that MSF is leading the effort. The letter was circulated for signatures by the Brazilian Network for Peoples Integration, among others. As of 13 May, there were 189 organisations signed on, 101 of them from Brazil.

The way ahead is not easy for the Brazilian government, but in the past, it has shown a willingness to take actions opposed by the United States and other developed countries when it feels it is necessary.