Identifier
Created
Classification
Origin
05BRASILIA2729
2005-10-13 15:56:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Brasilia
Cable title:  

ABBOTT AND GOB REACH DEAL TO AVOID COMPULSORY

Tags:  KIPR ETRD ECON IPR 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 BRASILIA 002729 

SIPDIS

SENSITIVE

DEPT FOR EB/IPE, WHA/EPSC AND WHA/BSC
DEPT PLEASE PASS TO USTR FOR MSULLIVAN, JMENDENHALL
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSEN/EOL SON
NSC FOR SCRONIN
AID FOR LAC/AA
DHHS FOR STEIGER

E.O. 12958: N/A
TAGS: KIPR ETRD ECON IPR
SUBJECT: ABBOTT AND GOB REACH DEAL TO AVOID COMPULSORY
LICENSE

REF: BRASILIA 2157 (NOTAL)

UNCLAS SECTION 01 OF 02 BRASILIA 002729

SIPDIS

SENSITIVE

DEPT FOR EB/IPE, WHA/EPSC AND WHA/BSC
DEPT PLEASE PASS TO USTR FOR MSULLIVAN, JMENDENHALL
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSEN/EOL SON
NSC FOR SCRONIN
AID FOR LAC/AA
DHHS FOR STEIGER

E.O. 12958: N/A
TAGS: KIPR ETRD ECON IPR
SUBJECT: ABBOTT AND GOB REACH DEAL TO AVOID COMPULSORY
LICENSE

REF: BRASILIA 2157 (NOTAL)


1. SENSITIVE BUT UNCLASSIFIED -- PLEASE TREAT ACCORDINGLY


2. (U) Summary. On October 10, Abbott Laboratories and
Brazil's Ministry of Health reached an agreement on pricing
and supply of the AIDS treatment drug Kaletra, ending
seven-months of intense negotiations under the threat of
compulsory licensing (see reftel). Now that talks with
Abbott have concluded, the MoH will likely turn its attention
to pending negotiations with Merck, Sharp & Dohme and Gilead
Sciences over their AIDS anti-retrovirals. While the
negotiated resolution with Abbott does not guarantee a
positive outcome for these firms, it provides some grounds
for optimism. End Summary.


3. (U) An October 11 press release from Brazil's Ministry
of Health confirmed Abbott's communication to the USG the
previous day that it had reached an accord with the GoB on
its AIDS treatment drug Kaletra. The MoH claimed victory in
reaching an agreement that would help guarantee the continued
viability of Brazil's universal access AIDS treatment program
by substantially reducing drug costs; according to the
Ministry, the agreement will provide savings of $339 million
between 2006 and 2011.


4. (U) Post did not receive details of the deal from
Abbott, but the MoH release claimed the company had agreed to
drop the per unit price for Kaletra from the current $1.17 to
$0.63, beginning in March 2006. The change-over would begin
in February when the MoH would purchase 9 million capsules at
the current price and an additional 2.8 million at the
reduced price. Thereafter, all sales would be at the $0.63
price, without any link to volume. In comparison, a
short-lived, informal deal struck on July 8 by Abbott with
the then outgoing Minister of Health had envisioned fixed GoB
annual expenditures for the drug, only producing a reduction
in per unit price over time -- the MoH had projected an
average per unit price of $0.81 for the 2006-2010 period.
Subsequently the MoH had pressed for a price of $0.41 per
unit.


5. (U) As part of the October 10 agreement, the MoH said
Abbott had agreed to donate $3 million worth of medicine or
inputs. The MoH also claims it will enjoy some advantage in
acquiring the new formulation of Kaletra, Meltex, that is
currently undergoing FDA approval.


6. (SBU) Although letters threatening compulsory licensing
were also sent in March 2005 to Merck, Sharp & Dohme and
Gilead Sciences regarding their anti-retrovirals Efavirenz
and Tenofovir, respectively, the MoH has only held
discussions with Abbott since June. Now that those talks
have concluded, the MoH is expected to turn its attention to
these other two companies. While the shape and outcome of
those negotiations will depend on the particular business
considerations of each firm, there is reason to be hopeful
that a negotiated resolution is possible, given that in its
talks with Abbott, the MoH did not succumb to intense
pressure from international NGOs and domestic political
forces to issue a compulsory license.


7. (SBU) Per our October 13 conversation with Gilead,
company representatives are currently weighing how to move
forward with the MoH. It is unclear whether recent negative
comments by Health Minister Felipe about Gilead's pricing of
Tenofovir referred to pricing under the company's current
contract or to its late May offer to the GoB - to which, to
date, the MoH has not provided an official response.
Meanwhile, we are trying to get in touch with the local Merck
representative to get a better idea of that company's next
steps.
Danilovich