The Brazilian government has announced plans for the local production of a generic version of Merck & Co’s HIV treatment Stocrin, a patented drug that the country issued a compulsory licence for in May last year.

Health Minister Jose Gomes Temporao announced that the Oswaldo Cruz Foundation, will start production of generic Stocrin (efavirenz) once Brazil’s regulatory agency Anvisa approves the treatment. Since the compulsory licence was issued, the government has been importing efavirenz from India.

Mr Temporao said that the price of the generic antiretroviral will be similar to the amount the Brazilian government is paying for the India-produced drug, around $0.45 per pill. Previously it was paying Merck $1.59 per tablet and though the New Jersey-based drugmaker offered a 30% discount, Brazil said it was only prepared to pay $0.65, the same as in Thailand.

The Ministry of Health, which provides HIV/AIDS treatment free to all patients at no cost, noted that 4% of its budget for antiretrovirals currently goes on efavirenz, compared with 11% in 2006. Some 200,000 people in Brazil receive treatment for HIV/AIDS and 80,000 of them take efavirenz

Mr Temporao said that the production of generic efavirenz represents a creative time for the pharmaceutical industry in Brazil stage and it could led to more “innovative initiatives”. He added that the country is also looking to attract investment from abroad so that the sector can develop even more.

Brazil has not been afraid to take on big pharma and as well as adopting compulsory licensing, it has successfully negotiated lower prices. In July, it worked out an agreement with Abbott Laboratories to cut the price of its AIDS drug Kaletra (lopinavir/ritonavir) by nearly 30%.

Earlier this month, Brazil rejected a patent request for Gilead Sciences’ antiretroviral Viread (tenofovir) saying that the drug, used by 31,300 patients in the country, was "in the public interest." As such, granting a patent would hamper Brazil’s free HIV/AIDS treatment plan.