WTO DISPUTE OVERSHADOWS BRAZIL DRUG PATENT THREAT

A dispute at the World Trade Organisation (WTO) over US subsidies to cotton farmers could bring retaliation from Brazilian trade officials, who have hinted that possible action could include breaking patents on leading HIV/AIDS treatments. The WTO has less than a month to consider Brazil's request to impose trade sanctions on the US.

In recent months, US-based Abbott Laboratories' antiretroviral Kaletra has been at the forefront of controversial Brazilian threats to compulsorily license the drug. Immediate plans to proceed with local manufacturing of a copy version appear to have stalled, but observers claim the dispute over US cotton -- which reportedly received subsidies worth US$2.7bn between 1999 and 2003 -- could give Brazil enough motive to press ahead.

Kaletra accounts for roughly 30% of the annual cost of Brazil's HIV/AIDS treatment scheme, which is budgeted at BRL253mn (US$113.52mn) this year. The US government has been cautious about the compulsory licensing threat, recently opting to postpone a review into the Generalised System of Preferences trade benefits programme on Brazilian imports. Meanwhile, US claims to have made "significant steps" on removing cotton subsidies are unlikely either to convince Brazil's government or reassure multinational drug firms, some of which have recently threatened to downscale investment in Brazil.