Merck & Co says that it is “profoundly disappointed” by the Brazilian government’s decision to issue a compulsory licence for the firm’s HIV treatment Stocrin which breaks the firm’s patent and allows for generic versions of the drug to be manufactured.

Brazil’s president Luiz Inacio Lula da Silva has issued the license which gives the government’s health ministry the green light to import a generic version of Stocrin/Sustiva (efavirenz) from India at around $0.45 per pill. The move follows lengthy talks which saw the government reject what Merck claims was a “fair offer” on Stocrin, thought to be a 30% discount on the present price to around $1.10 per tablet. Brazil had suggested the price had to be cut to $0.65, the same as in Thailand.

However, Merck is having none of that and said “this expropriation of intellectual property sends a chilling signal to research-based companies about the attractiveness of undertaking risky research on diseases that affect the developing world, potentially harming patients who may require new and innovative life-saving therapies".

The drugs giant added that R&D-driven firms “simply cannot sustain a situation in which the developed countries alone are expected to bear the cost for essential drugs in both least-developed countries and emerging markets.” As such, “we believe it is essential to price our medicines according to a country's level of development and HIV burden, thereby ensuring equitable access as well as our ability to invest in future innovative medicines.”

Merck angrily pointed out that “as the world's 12th largest economy, Brazil has a greater capacity to pay for HIV medicines than countries that are poorer or harder hit by the disease,” concluding that the government’s decision “ will have a negative impact on Brazil's reputation as an industrialised country seeking to attract inward investment, and thus its ability to build world-class R&D.”

The New Jersey-based group said it hopes the government of Brazil “will reconsider its stance in the interests of HIV patients around the world" but that does not seem likely. It is the first time Brazil has bypassed a patent, but President Lula said it would consider doing so again on any drug sold at what the government feels are unfair prices. "Between our business and our health, we are going to take care of our health," he said after signing the decree. The country’s health ministry added that it will save $30 million this year from $42.9 million it would pay to Merck, though the latter will still receive a small royalty. Brazil distributes all HIV/AIDS treatments to sufferers free of charge.

Brazil’s move is victory for AIDS sufferers

Michael Weinstein, President of the USA’s AIDS Healthcare Foundation, said Brazil “is once again leading the way to affordable AIDS drug access for every nation”. He added that “today is a victory for AIDS activists and patients everywhere, and proof that drug companies will go down in defeat every time they place themselves in the way of justice.”

However, the International Federation of Pharmaceutical Manufacturers and Associations backed Merck, saying that although permitted under specific conditions by the World Trade Organisation's Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement, “compulsory licensing is not a solution to improve access to medicines. Improved access can only be assured by adequate financing and collaboration with the innovative companies that develop new therapies.” It added that “compulsory licensing is a confrontational approach, and may be aimed to benefit local government-owned companies’ commercial interests.”

Furthermore, there are fears that Brazil could now face the wrath of the USA and economic pressure may now be brought to bear on the Latin American country. The US government has just added Thailand to its 'priority watch list,' a ranking of serial violators of intellectual property, just months after the country issued compulsory licences for Abbott Laboratories' AIDS drug Kaletra (opinavir/ritonavir) and Sanofi-Bristol-Myers Squibb’s anti-clotting Plavix (clopidogrel). Thailand had already issued a licence on efavirenz a few weeks earlier.