November 11, 2005

Commentators in the US have urged President George W. Bush to take a hard-line against Brazil concerning intellectual property (IP) rights. The calls come after the recent standoff between the Brazilian government and US drug maker Abbott Laboratories over antiretroviral treatment Kaletra.

In order to reduce the costs of its state-administered HIV/AIDS treatment programme, Brazil demanded that Abbott reduce its price for Kaletra, which accounted for around 30% of expenditure. After fierce negotiations, a price cut of 46% was eventually agreed. The Brazilian government has frequently threatened to break patents on Kaletra and produce its own generic version of the drug.

Under World Trade Organisation (WTO) regulations, a country can compulsorily license a drug in the event of "national emergency." Yet observers claim that in Brazil the HIV/AIDS incidence stands at 1%, the same as in the US. They also point to the fact that Brazil only spends 2% of its GDP on healthcare compared to 14% in the US.

Critics in the US assert that such aggressive measures in Brazil are not designed to save lives but to appropriate pharmaceutical technology and expertise with which to boost its own drug export business. These allegations have been fuelled by recent technology transfer agreements signed between Brazil and a number of African countries with high HIV/AIDS rates, such as Nigeria and Mozambique.

Market observers maintain that patent busting is counter-productive in the long term, as a poor IP environment causes a decrease in foreign investment, which is key to drug industry development. Recent economic studies claim that for every 1% increase in the degree of patent protection, US investment increases 0.45%.