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Merck says AIDS drugs price cuts not for Brazil
Shasta Darlington
March 7, 2001
RIO DE JANEIRO, Brazil, March 7 (Reuters) - U.S. drugmaker Merck and Co Inc. said on Wednesday that it is not yet extending to Brazil the deep discounts on two AIDS drugs that it announced earlier for countries in sub-Saharan Africa.

Merck said it would offer the drugs at no profit to "developing countries," fueling hopes that the discounts would be extended to Brazil, which plans to violate Merck's patent and start producing at least one of those drugs by June if the price does not come down.

"Those prices that were released today are not applicable to Brazil as they are not (applicable) to quite a few other countries," said Marcos Levy, director of corporate affairs at Merck's Brazil unit. He said they are being extended to some, but not necessarily all, countries in sub-Saharan Africa.

"We are in the process of trying to negotiate a price with the government of Brazil that would be good for them and good for us," he said, adding that Merck hoped to announce the new price by the beginning of next week.

Brazil, with a controversial law allowing it to manufacture AIDS drugs under certain conditions, has made it a model in the global AIDS fight, but has also earned it the ire of the pharmaceutical industry which is trying to punish Brazil at the World Trade Organization (WTO).

Merck said for sub-Saharan Africa, it will cut the price of Crixivan to $600 per patient per year -- the first protease inhibitor to be offered at such deep discounts -- while Stocrin will be offered at $500.

After meeting with Merck representatives in Brasilia, the director of the state-owned Brazilian laboratory producing AIDS drugs said she urged the company to extend the same prices to Latin America's largest country.

"The price is fantastic, it's half of what we pay for generics from India," said Eloan dos Santos Pinheiro. "If we could get that price there would be no need to produce the drugs here."

PATENTS AT RISK

After months of stalled negotiations, Brazil threatened to start producing the generic version of Stocrin, known as Efavirenz, and another drug in June if pharmaceutical companies don't drop prices.

Brazil would be allowed to violate the patents under a local law that requires foreign firms to manufacture drugs -- or any other patented product -- withing Brazil or lose exclusive rights to a local competitor after three years.

Still, Levy warned that Brazil will not likely see the same discount as sub-Saharan Africa. "You have countries that have no resources at all and countries that have some appreciable degree of resources. Brazil is in the category of countries that have some very appreciable resources," he said.

In absolute numbers, Brazil suffers from a high rate of AIDS infection with 190,000 cases of registered HIV cases, and 500,000 suspected cases. But it has become a model in the AIDS fight with only 0.6 percent of the adult population infected.

In sub-Saharan Africa, 25.3 million people are living with HIV-AIDS, according to the United Nations and in Botswana, 35.8 percent of the population is infected.

Merck's decision comes as the pharmaceutical industry is embroiled in a fierce battle with the government of South Africa over access to cheap drugs, but could also be a result of pressure from Indian generics and threats from countries like Brazil to violate patents.

Starting in 1996, Brazil's government started making drugs to treat AIDS as part of its policy of free treatment for all patients. Brazil now legally makes eight of the 12 drugs used in the so-called AIDS cocktail.

As a result, AIDS drug prices have plummeted more than 70 percent, but prices on those like Efavirenz that do not face competition from locally produced versions have remained high.

A typical treatment in Brazil costs about $4,400 compared to between $12,000 and $15,000 in the United States.

But as Brazil stepped up pressure on remaining drugs, the United States submitted a request to the WTO to set up a dispute panel to examine charges that Brazil's patent law discriminates against imports.



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