Roche and Brazil Agree to Discounted Viracept Deal
Brazilian health officials and Roche Holding AG have reached an agreement in which the drug company will cut the price of its AIDS drug Viracept by another 40%, the New York Times reports. The treatment will now be available in Brazil for about 30% of the drug's price in the United States. Brazil currently spends about $303 million per year to provide the drug as part of the free treatment it provides to about 100,000 citizens with HIV/AIDS (Rich, New York Times, 9/1). With the new 40% reduction, Brazil will save $35.4 million beginning next year (Boston Globe, 9/1). The agreement comes after Brazil's health minister Jose Serra two weeks ago said that contract talks with Roche had "ended in deadlock" and he was beginning the process to issue a license to produce a generic version of Viracept (New York Times, 9/1). Serra said, "Pharmaceutical companies have to realize that pricing should be different for developing countries. ... Our resources are tight" (Darlington, Reuters/Los Angeles Times, 9/1). By law, Brazil can break patents in "emergency situations when the government deems that a manufacturers' prices are abusive." Roche officials said they were "suprise[d]" by Serra's decision, saying that they thought negotiations were ongoing and that the company's contract with Brazil did not expire until the end of the year (New York Times, 9/1). During the negotiations, Roche had offered a 17% price reduction for Viracept (Donnelly, Boston Globe, 9/1). Further, Roche officials said they planned to begin producing Viracept in Brazil next year, a move that could have made the drug's price "even cheaper" (New York Times, 9/1).
Support and Opposition to the Deal
James Love, director of the not-for-profit Consumer Project on Technology, said he was "disappointed" with the agreement because Brazil opted not to issue a compulsory license, which would have allowed the country to make a generic version of the brand-name patented drug. Love said that if Brazil had issued a compulsory license, other developing countries would have followed its example. The Times reports that many developing countries have delayed plans to produce generic versions of HIV treatments for fear that some international companies would stop conducting business with them (New York Times, 9/1). Love said, "I think Brazil screwed up. Whatever it cost to produce it today isn't going to be what it's going to cost tomorrow. They have locked themselves in to a deal. They basically backed off because of pressure of what it could do for investments in Brazil" (Boston Globe, 9/1). The Times reports that pharmaceutical companies expressed "relief" at the agreement (New York Times, 9/1).