U.S. DoS Cable: GOB REACHES PRICING AGREEMENTS ON THREE MORE AIDS DRUGS


R 302037Z – January 30, 2004
FM AMCONSUL SAO PAULO
TO SECSTATE WASHDC 0593
SUBJECT: BRAZIL UPDATE: GOB REACHES PRICING AGREEMENTS ON THREE MORE AIDS DRUGS

1.  The GOB recently closed pricing deals with pharmaceutical firms Roche Holding AG, Abbott Laboratories, and Gilead Sciences Incorporated on patented anti-AIDS drugs Nelfinavir (patented in Brazil by Roche), Lopinavir (patented in Brazil by Abbott), and Tenofovir (patented in Brazil by Gilead, a California-based biopharmaceutical company).  The agreements with Roche and Abbott followed a December agreement with Merck (ref C) and came more than six months after the Ministry of Health (MOH) initiated pricing negotiations on three AIDS drugs (Efavirenz, Nelfinavir and Lopinavir) with the three laboratories.  Minister of Health Humberto Costa claims the deals with save the GOB approximately USD 107 million this year.  End summary.

Negotiations with Roche and Abbott End in Agreements
——————————————————————–

2. The GOB announced on January 15 that it had successfully concluded pricing negotiations with Roche and Abbott on the patented anti-AIDS drugs Nelinavir and Lopinavir.  The agreements came more than six months after the Ministry of Health (MOH) created a special negotiating team aimed at winning price reductions on the AIDS drugs (Efavirenz, Nelfinavir, and Lopinavir) from the three laboratories that hold their respective patents in Brazil.  Merck Dohme & Sharp (Merck), patent holder for Efavirenz, agreed to a 25 percent discount on its product in December 2003 (ref C).

3.  According to a January 16 article in “O Estado de Sao Paulo,” the GOB agreed to Roche’s offer of a 10 percent discount on Nelfinavir, the antiretroviral developed by U.S.-based Agouron Pharmaceuticals (a Pfizer subsidiary) for which Roche holds the patent in Brazil.  The deal with Roche is the smallest discount agreed to by the MOH to date, but Minister of health Humberto Costa defended the Roche accord by highlighting its other components.  In addition to price cuts, Roche will donate antiretroviral treatments to children, as well as replace the GOB’s stock of Nelfinabir with upcoming expiration dates.  (Comment: Costa also admitted that the GOB stood to save relatively little from importing generic versions of Nelfinavir – approximately USD 2.5 million or 2 percent of total program costs – perhaps adding to the MOH decision to accept the lower offer from Roche.  End comment).

4.  The GOB also won a relatively meager 13.3 percent discount from Abbott on its patented antiretroviral Lopinavir, this compared to the 76.4 percent and 25 percent discounts agreed to during negotiations with Bristol-Myers Squibb and Merck Sharpe and Dohme late last year (ref C).  MOH insiders revealed to “O Estado” that the GOB called off negotiations with Abbott when it was discovered that imports of copied Lopinavir did not meet minimum quality standards.  According to the source, negotiations were suspended “because the government lost its bargaining power.” (Note: During a December 5 meeting with Econoff, Abbott’s Director of Institutional Relations Irapuan de Oliveira alluded to Abbott’s unique negotiating position, stating that the company holds a worldwide patent on Lopinavir and was at the time the only producer of the drug.  See Ref C. End note.) Consulate has been unable to reach representatives from Roche and Abbott for additional comment on the agreements.

5.  Press reports also indicate that while not subject to the special negotiation process with the MOH, Gilead Sciences Incorporated, a California-based biopharmaceutical company, agreed to grant a 43.35 percent discount to the GOB on its patented Tenofovir antiretroviral.

Comment
————

6.  Although the discounts won were lower than the 40 percent average reduction originally sought by the MOH, Minister of Health Humberto Costa was quoted in the press as being positive about the results.  According to Costa, the pricing deals will translate into approximately USD 107 million in savings on medication costs this year, bringing the total annual cost of Brazil’s successful AIDS treatment program to its lowest level since 1999 (USD 180 million) and cutting the average cost per patient to a new low of USD 1,200.  Such savings will allow treatment to be extended to 20,000 new patients this year.  As efforts continue to identify additional AIDS sufferers and get them treatment, the GOB’s ambitious treatment program will continue to face funding pressures.  For 2004, at least, the MOH’s determined negotiating stance appears to have been successful in keeping its costs contained without having to carry out threats to resort to compulsory licensing.  End comment.

7. This message was coordinated with Embassy Brasilia.

DUDDY