In the latest test of the WTO’s rules on intellectual property rights, Brazil has issued a compulsory license for the patented AIDS drug efavirenz that will allow companies to import and eventually manufacture generic versions of the drug more cheaply.
Brazil’s decision follows close on the heels of Thailand’s compulsory licensing of efavirenz and two other medicines in recent months. Brazil proceeded with the compulsory license after failing to reach an agreement with the drug’s manufacturer Merck to lower prices.
Efavirenz is currently used by 75,000 of the 180,000 patients that receive free AIDS drugs from the Brazilian government. The health ministry says the compulsory license will help reduce its costs by US $240 million between now and 2012, when the patent expires.
Merck and the US-Brazil Business Council condemned the decision, describing it as "a major step backward" that will discourage investment in Brazil.
Brushing aside such criticisms as he signed the decree granting the compulsory license, Brazilian President Luiz Inacio Lula da Silva said that if being forced to choose “between our business and our health, we are going to take care of our health.”
According to the WTO Agreement on Trade-related Intellectual Property Rights (TRIPS), governments may issue a compulsory license in cases of national emergency or government use.
Nevertheless, the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), whose members include Merck and 25 other international pharmaceutical companies, reacted angrily and accused the Brazilian government of adopting "a confrontational approach".