Situation seems to be deteriorating in Brazil regarding compulsory licensing of AIDS retrovirals

There's a sense this week that the situation is deteriorating in Brazil regarding their threat to compulsory license AIDS drugs.

We've described the situation first here, then here, then here.

Now, here's the situation in a nutshell:

• Brazil is among the 15 largest economies in the world, and their health budget is adjusted for inflation, so it "keeps up." Brazil is a strong economy. Don't forget that Brazil exports jet aircraft to the strongest Western economies.
• Further, Brazil does NOT have an AIDS crisis. Yes, you heard me right. On a personal level, a single case of AIDS is a crisis, but on a national level, if less than one percent of your population is living with AIDS (which is the situation in both Brazil and the United States), you do not have an AIDS crisis.

Now, Africa has an AIDS crisis. In some African countries more than 20 percent of the population has AIDS. But Brazil is nowhere near an AIDS crisis.

So, in Brazil, you have a strong economy dealing with, dare we say, a manageable AIDS situation. In fact, "manageable" is probably the right word--we can't cure AIDS, but we can manage it. And in Brazil they ARE managing it: From 1998 to 2002, the number of new AIDS cases in Brazil dropped by 50 percent.

The conclusion is that Brazil can afford to fund its AIDS program, especially since the price of AIDS treatments is actually falling. It's probably the only area of health care costs that is falling rather than skyrocketing. From 1997 to 2003, Brazil was able to quadruple the number of AIDS patients it was treating with AIDS drugs, but over the same time Brazil's expenditures on AIDS drugs dropped slightly, from R$610 million in 1999 to R$563 million in 2003. Treating 4X as many patients for less money!

So what is the crisis in Brazil? It's a political crisis, not an AIDS crisis. Brazil is playing a game of political "chicken" on AIDS drugs and compulsory licensing, trying to please an anti-U.S. political constituency in Brazil, and falling for a siren song being sung by a small group of neo-Marxist, anti-pharma, anti-capitalist activists.

Here is what Brazil is threatening:

• Brazil threatens to compulsory license (take by force) the patents on AIDS drugs that belong to Abbott Labs (Kaletra).
• Brazil's House of Representatives is considering a bill that would completely deny patentability to all HIV/AIDS drugs. This is a MAJOR violation of international trade agreements.

Even if Brazil doesn't follow through with these threats, they have already introduced such political risk and uncertainty into the market for AIDS drugs that there are already 27% fewer companies working on HIV/AIDS research since 1997. Today, given the threat of having the fruits of your research taken from you, it could be argued that any company expending significant efforts on HIV/AIDS drugs is crazy.

If Brazil succeeds, HIV/AIDS patients all over the world will suffer, even those in more industrialized countries, because innovators will move on to other pursuits that don't carry such political risk.

It's ironic--the anti-pharma activists are always complaining that the industry is spending too much time doing R&D on "lifestyle" drugs for the wealthy nations, and neglecting the diseases of the developing world. Yet, at the same time, the anti-pharma activists are pressuring Brazil to follow through on compulsory licensing of AIDS drugs, which will FURTHER encourage pharma to stay away from such R&D, and retreat to less-risky and more lucrative lifestyle drugs valued by prosperous nations.

If Brazil doesn't have the sense, or even the self-interest, to pull back from this precipice, hopefully the U.S. government will make it clear that such a  move would result in immediate and significant trade sanctions. Brazil's actions are a serious threat to the U.S. pharmaceutical industry, which is the prototypically desirable industry for the U.S.--high wage, high-skill, "brain-gain" jobs in an industry where the U.S. can be globally competitive.

Everybody loses if Brazil takes this leap. Everybody except for a small handful of neoMarxists. And, come to think of it, Marxists have always been willing to have the majority suffer in the name of their errant ideology.