By Kevin E. Noonan --
A measure of sanity returned last week, when the Brasilian Health Ministry and Abbott Laboratories announced an agreement on a pricing regime for Abbott's anti-AIDS drug, Kaletra®. Under this agreement, Brasil will not "break" Abbott's patent by permitting sale or importation of a generic version of the drug.
As set forth earlier, Brasil is saddled with a large HIV-positive patient population that costs the Brasilian government tens of millions of dollars a year in drug costs alone. This led Brasil to recently threaten to invoke provisions of its national law implementing the TRIPS agreement in conjunction with the provisions of the Doha Declaration that would have permitted Brasil to import a generic version of the drug without incurring the type of trade sanctions envisioned when the World Trade Organization was formed.
The agreement sets prices for the drug for the next six years, and comes out to about $1,000 per year per patient, at a 30% reduction of per pill costs (from $1.04 per pill to 73 cents per pill this year and 63 cents in 2008). Brasil's health ministry said the price reduction will give Brasil a savings of $18 million in the first year and up to $259 million over the next six years. Brasil receives the additional benefit that the agreement covers an improved version of the drug, Meltrex®, once the U.S. Food and Drug Administration grants approval to the new drug.
One area of apparent disagreement is over technology transfer for producing the drug. The Brasilian Health Ministry said last week that Abbott will begin technology transfer in 2009, a date Abbott disputes: according to the company, it will not transfer Kaletra®-producing technology until 2015, when the patent expires.
Abbott's actions are consistent with its similar capitulation when the government of Thailand made similar threats. They are in stark contrast to the situation with Merck's anti-AIDS drug efavirenz: this week, Brasil received the first shipment of a generic version of this drug from an Indian company, Aurobindo, under the terms of a compulsory license issued by the Brasilian government in May. In that case, Merck was reported to have refused a 60% price reduction demanded by Brasil.
Under the political and economic realities Western pharmaceutical companies face internationally, and in the face of Brasil's evident willingness to follow through with compulsory licenses as evidenced by the efavirenz example, Abbott had little choice. However, without a coordinated effort between innovator drug companies and governments representing the source as well as the recipient countries, the other economic realities - the costs of developing new drugs and the factors that influence investment in those development activities - will no doubt soon have a negative effect that will be likely felt worldwide.
For additional information regarding this and other related topics, please see:
- "Africa (Still) Depending on the Kindness of Strangers in Anti-AIDS Drug Pricing," May 29, 2007
- "U.S. Trade Policy Becoming Less Pharma-Friendly," May 18, 2007
- "The "Unfairness" of World Intellectual Property Protection According to The New Yorker," May 17, 2007
- "Worldwide Drug Pricing Regime in Chaos," May 9, 2007
- "Not Getting It about Patented Drug Prices at The Wall Street Journal," May 6, 2007
- "A Modest Proposal Regarding Drug Pricing in Developing Countries," May 2, 2007
- "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries," May 1, 2007
- "Abbott Agrees to Offer AIDS Drug at Reduced Price," April 12, 2007
- "No New Abbott Medicines for Thailand," March 14, 2007
- "More Compulsory Licensing in Thailand," February 1, 2007
- "Thailand Compulsory License Still in the News," December 18, 2006
- "Thailand Issues Compulsory License for AIDS Drug," December 6, 2006