R 031944Z JUN 05 – June 3, 2005
FROM: American Embassy Brasilia
TO: Secretary of State, Washington, D.C.

1. (SBU) Summary.  On May 24 and 25, U.S. pharmaceutical companies Gilead Sciences, Abbott Laboratories, and Merck separately reported to the Embassy on the negotiations with Brazil’s ministry of health (MoH) over its demands that they acquiesce to licensing production of certain HIV/AIDS drugs (reftel A)…[middle of paragraph excised]…Despite MoH demands, none of the companies have yet entered into voluntary license negotiations with the ministry.  All acknowledged that the issues is as much political as economic making the eventual outcome difficult to predict.  Possible movement in the Brazilian Chamber of Deputies on draft legislation that would make AIDS drugs and their production processes unpatentable would only further complicate an already complicated situation.  End Summary.

[excision]…Ambassador committed to continuing embassy support, but pointed out that the political sensitivity of the issue cast doubt on whether the MoH would back down on its licensing demands…[excision]

10.  (SBU) On the positive side, the MoH is submitting to an inter-ministerial discussion with MDIC, finance and MRE, ministries that are not supportive of its stance.  It is our understanding that once negotiations with the companies are “complete,” the discussion will move to the ministerial level where arguments in favor of broader, longer-term economic interests may be brought to hear.  We continues to believe that to resonate with the GoB, the arguments will need to provide a sound analysis as to why compulsory licensing would be damaging to Brazil’s economic and public health interests.  Concomitantly, the companies will also have to demonstrate that they plan to make good-faith efforts to address the supply/pricing needs of Brazil’s HIV/AIDS treatment program.

11. (SBU) However, the decision will ultimately be made by President Lula within a rather harsh political environment.  Dozens of NGOs have denounced the GoB for delaying in breaking the patents, delivering a mock “spine” to the Brazilian Embassy in Washington in protest on May 13.  Pedro Chequer, head of Brazil’s Sexually Transmitted Diseases and AIDS program in the MoH, was reportedly in the Brazilian Chamber of Deputies the week of May 23 encouraging lawmakers to pass legislation that would make AIDS drugs and their production process unpatentable under Brazilian industrial property law.  (On June 1, the Chamber’s committee for constitutional and justice affairs approved the bill; the likely next stop for this measure will be the Brazilian Senate, where it will need to pass through the full range of committees and the Senate plenary.)  Embassy will continue to monitor the GoB deliberations as well as to provide input through appropriate GoB interlocutors.



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