R 122031Z AUG 05 – August 12, 2005
FM AMEMBASSY BRASILIA
TO SECSTATE WASHDC 2501
SUBJECT: Brazil’s National Health Council Recommends Compulsory Licensing of Antiretrovirals
1. SENSITIVE BUT UNCLASSIFIED
2. (SBU) Summary. Adding to the tension surrounding negotiations between the ministry of Health and U.S. pharmaceutical companies over potential compulsory licensing, on August 11, Brazil’s National Health Council approved a resolution in which it recommended that the Ministry of Health immediately issue compulsory licenses for antiretroviral drugs produced by Abbott Laboratories, Merck Sharp & Dohme, and Gilead Sciences, and that the issue, in general, of patents for medicine be subject to a wider debate. The resolution was sent to the Minister of Health, who has 30 days in which to sign, not sign, or suggest modifications to the resolution. An accompanying document on the Ministry of Health website, “The Sustainability of the Universal Access to Antiretroviral Drugs in brazil,” presents a justification for compulsory licensing of anti-retrovirals. A Ministry of Foreign Affairs interlocutor reports that the Council resolution is not legally binding and claims the Minister of Health is serious about continuing negotiations with the pharmaceutical companies. While the Council’s action does not represent a GoB decision on compulsory licensing, it further aggravates mounting pressure in Brazil to issue compulsory licenses for AIDS anti-retrovirals. End summary.
3. (U) During a meeting on August 10, Brazil’s National Health Council (CNS-Portuguese acronym) unanimously approved a Resolution that calls for the Ministry of Health to immediately issue compulsory licenses for antiretroviral drugs Kaletra (combination Lopinavir/Ritonavir), Efavirenz, and Tenofovir, which are produced by Abbott Laboratories, Merck Sharp & Dohme, and Gilead Sciences, respectively. The text of the resolution was released by the ministry of Health’s Secretariat of Health Protection – National DST/AIDS Program Press Office; see para 11 for an unofficial translation. The resolution was sent to the Minister of Health, who has 30 days in which to sign, not sign, or suggest modifications to the resolution.
4. (U) The Ministry of Health has been actively engaged in pricing/licensing negotiations with these U.S. pharmaceutical companies since March of this year (see reftel). Text in the press release envelope for the CNS resolution specifically cites Abbott and Merck as being uncooperative (Merck had an on-going dialogue with the GoB on potential voluntary licensing prior to March). Negotiations with Abbott intensified after June 24, when the Ministry o Health singled out Kaletra in a “declaration of public interest” to legally pave the way for compulsory licensing of the drug; the ministry then pressed the company to agree within 10 days to a per unit price for Kaletra of US$0.68, compared with a current price of US$1.17, to avoid compulsory licensing.
5. (SBU) Shortly after taking office July 8, new Minister of Health Saraiva Felipe announced the MoH was re-opening an agreement that out-going minister Costa and Abbott had reportedly reached on the day of Felipe’s swearing-in. In public statements, Felipe justified the action by asserting that no written agreement existed and that Abbott and the ministry did not agree on what terms had been reached on July 8. [remainder of paragraph excised].
6. (U) The National Health Council is a private-public sector advisory body, principally comprised of labor, social, economic, and health representatives from civil society. Twenty of CNS’ forty counselors were present for the August 10 vote.
7. (SBU) According to [excised] of the Foreign Ministry’s [excised] the resolution is a recommendation and is not legally binding on the Minister of Health. Furthermore, he reported that his MoH interlocutor had emphasized to him that Minister Felipe remains “very much interested in pursuing negotiations with the companies in order to reach mutually satisfactory results.” Brasilia’s paper, Correio Braziliense, quoted Felipe in its August 12 edition as saying he is not going to sign the resolution now and that he is going “to evaluate it before taking any decision.”
8. (U) Nonetheless, the trend is not encouraging. An accompanying document of unknown authorship on the Ministry of Health website, “The Sustainability of the Universal Access to Antiretroviral Drugs in Brazil,” presents social and legal justifications for compulsory licensing of antiretrovirals (see para12). The analysis suggests that “public interest” is only satisfied through compulsory licensing and the details make quick implementation appear likely should a decision be made to issue a compulsory license.
Comment
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9. (SBU) While the CNS resolution does not represent a legal step in the process toward issuing a compulsory license, and a GoB decision on the matter has not yet been taken, it further aggravates the negotiation environment. In particular, so publicly asserting the Ministry’s goal of a $0.41 unit price for Kaletra may further harden the MoH’s pricing position, eliminating crucial flexibility. Furthermore, the resolution throws Merck and Gilead into the same boat with Abbott, even though the MoH has not been actively engaged in negotiations with these companies while it has focused on Abbott.
10. (SBU) Concentration of this issue within the Ministry of Health has made finding knowledgeable and effective GoB interlocutors challenging. Commercial ministers, such as Finance Minister Palocci and Minister of Development, Industry and Trade Furlan have not been inclined to become involved; a July 28 note from Minister Furlan to Secretary Guiterrez unrealistically suggested that negotiations between the MoH and Abbott appeared “very close to a satisfactory agreement.” We will continue to consult with Washington agencies on the most appropriate and effective means for USG official to interact with the GoB on the matter. The Ambassador will meet Minister Felipe in a courtesy call August 25, but the issue may be OBE by then.
11. Informal English-Language Translation of National Council of Health Resolution No. X with press release envelope [available at http://sistemas.aids.gov.br/imprensa/Noticias.asp?NOTCod=66725]