June 29, 2005

The US government has pledged to "monitor" the Brazilian government's compulsory license for Abbott Laboratories' Kaletra HIV/AIDS drug. However, officials have refused to comment on whether punitive action will be sought, and also reiterated support for principles in TRIPS allowing foreign governments discretionary power over compulsory licensing.

Brazil claims Kaletra is one of three ARVs accounting for 63% of the country's annual spending on HIV/AIDS therapies, or roughly US$250mn. The licensing plan is due to go into effect next week, after Abbott reportedly refused to lower the price from US$1.17 per dose. Negotiations with two other US firms, Gilead and Merck & Co, are understood to be ongoing.

Meanwhile, US research-based drug industry association PhRMA has cast doubt on the Brazilian plan's validity. A PhRMA source commented that statistics indicate that Brazil's ARV spending has fallen in recent years, and that breaking patents will not solve the HIV/AIDS problem. Indeed, it is likely that spending has fallen due to greater production by state-owned facilities, as the government has moved to take its ARV supplies -- and exports --"in-house."