I. Identification

1. The Issue

Is the right to life a powerful enough human rights issue to be able to violate drug patent laws? This debate has been reinvigorated by the Brazilian Ministry of Health throughout the past year as it continues its successful battle against HIV/AIDS. The program has been recognized globally for its winning combination of preventative education and free prescriptions for anti-retroviral (ARV) medications. However, the sustianability of this program is in jepordy due to the high cost of the medicines. The Brazilian government threatened to mass produce generic versions of patented AIDS medicines when it could not reach an agreement on lower costs with the patent holders from the United States. The United States government brought this controversy to the World Trade Organization on behalf of its pharmaceutical companies who were complaining of intellectual property violations. Agreements signed at the WTO conference in Qatar on November 14, 2001 have granted a partial victory for Brazil and other nations struggling to provide lifesaving medicines to their citizens infected by HIV/AIDS.

2. Description

"Local manufacturing of many of the drugs used in the anti-AIDS cocktail is not a declaration of war against the drugs industry. It is simply a fight for life."

-Brazilian government media campaign 1

"Brazilian AIDS drugs a sure path to economic sickness. The United States correctly argued that Brazil must no longer manifacture proprietary AIDS drugs in violation of U.S. drug company patents, even if this will mean removing 100,000 Brazilians from treatment rosters. The U.S., calling patent enforcement a form of 'tough love,' insisted that the number of lives lost to AIDS in the short term will be dwarfed by the number saved in the long term through a more efficient medical products market."

History of Reported AIDS Cases in Brazil 7

YEAR	1979	1980	1981	1982	1983	1984	1985	1986	1987	1988	1989
CASES	0	1	0	11	36	132	553	1148	2708	4380	6099

YEAR	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	TOTAL
CASES	8584	11374	14345	16096	17504	18383	19222	17187	7564	N/A	145327

The US perspective is that Brazil's presidential decree uses the 1997 patent law to create an advantage for Brazilian products over imported products. The Article 68 of the law requires all foreign products to be manufactured in Brazil within three years of receiving a patent. If the foreign company does not begin production within Brazil by the deadline, then local Brazilian manufacturing may begin regardless of who holds the patent. To counter the U.S. argument, the Brazilian government states that Article 68 only takes effect when the patent holders abuse the rights and economic power of the patent to the detriment of others. On behalf of the Pharmaceutical Research and Manufacturers of America (PhRMA), the United States brought the complaint about the measures of this law to the World Trade Organization. The U.S. argued that the debate extended well beyond the production of patented AIDS medicines. The focus of the U.S. argument was the violation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) for all foreign products based on biased protectionist measures for Brazilian products through the existing Brazilian patent law.

The threat of either WTO or U.S. sanctions did not deter Brazil in its goal of fighting AIDS. After negotiations with U.S. pharmaceutical companies failed to produce costs low enough to satisfy Brazilian Health Minister, Jose Serra, he declared on August 22, 2001, that Brazil would go ahead with local production of patented AIDS medicines. Legitimizing the action as stated in Article 71 of the Brazilian patent law by supporting the presidential decree of a national health emergency, Serra granted a compulsory license, for the production of Roche's Nelfinavir to Brazilian pharmaceutical firm Far Manguinhos. The U.S. did not include Article 71 in its complaint to the WTO against Brazil, although the U.S. does not feel the article's authority to issue a compulsory license during a national emergency is TRIPS compliant. 8 The debates and negotiations which ensued this declaration did eventually bring down the costs of the medicines for Brazil. The following table shows the pharmaceutical companies involved, what medicines they produce and the change in cost for Brazil.

Cost Reductions for AIDS Medicines

Free prescriptions for AIDS medicines are current topics for organizations such as the United Nations and Medcins sans Frontiers, Doctors Without Borders. Medcins sans Frontiers is interested in replicating the program in other countries, by seeking the most affordable sources of generic AIDS medicines to be distributed. This year the United Nations Commission on Human Rights voted 52-1 in favor of making the accessibility to AIDS medicines a human right, with the United States as the dissenting vote. The 2001 World Trade Organization's meeting in Doha, Qatar ended with a limited victory for Brazil and other developing countries, based on individual implimentation of the Declaration on the TRIPS Agreement and Public Health. The following excerpt shows the essence of the agreement.

"We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all."

15. Trade Product Identification: AIDS Medicine

16. Economic Data:

As Brazil's number one trading partner, the United States yields considerable influence on the Brazilian economy. The trade imbalance is viewed by the Brazilian government as being perpetuated by U.S. trade barriers, which become even stronger when lobbyists take action during election years in the U.S. This can work in Brazil's favor if the lobbyists are trying to export goods to brazil and want the process to move more easily through business alliances. There is a tariff imbalance where "the average tariff or tariff equivalent levied by the United States on the 15 most important international Brazilian exports reaches 45.6% while the average tariff levied by Brazil on the 15 most important U.S. exports is only 14.3%. 12 As of 2000, Brazil was the United States' 14th most prominent trading partner. The following statistics depict total annual imports and exports between the two countries for the year 2000 in millions of dollars.

U.S - Brazil Trade in 2000 (from the Brazilian perspective)

SOURCE	IMPORTS	EXPORTS
US Census Bureau	$13,855.01	$15,359.61
US International Trade Commission	$13,731.60	$14,025.50

17. Impact of Trade Restriction: High

US pharmaceutical industry loss in research and development funds

Brazil gains in savings and new jobs

18. Industry Sector: Pharmeceutical

19. Exporters and Importers:

In 1980, the first diagnosis of AIDS was made in Brazil. The 1980's were a time where a relatively unknown virus rapidly became an epidemic for Brazilians. It was centralized around the major southern cities, especially in Sao Paulo and Rio de Janeiro. Initially, it was considered a homosexual disease based on recorded cases, however, by the 1990's, homosexual cases dropped, and heterosexual cases rose. The source of change has been connected to intervenus drug users, and to heterosexual transmission. The most numerous populations currently affected are the uneducated poor and females (who are historically less educated). The cases noted currently in Brazil cover a larger geographical area than in previous years, including the southeast, southwest, and northeast regions, but not to the same extent as in the urban centers of Sao Paulo or Rio de Janeiro. The population of infected Brazilians today is also younger on average than in the 80's. The overall number of cases rose rapidly during the 80's, peaked during the early 90's, then stabilized and began declining by the mid to late 90's. This negative trend is continuing for the population as a whole. 13

20. Environmental Problem Type: Health

21. Name, Type, and Diversity of Species

22. Resource Impact and Effect: Impact - High; Effect - Product

23. Urgency and Lifetime: High and 1-5 years

24. Substitutes: Generics

VI. Other Factors

25. Culture: Yes

26. Trans-Boundary Issues: No

27. Rights: Yes

28. Relevant Literature

Bibliography:

1. CNN, 2001, Brazil's AIDS Policy Earns Global Plaudits

2. World Trade Organization, September 18, 2001, Homepage

3. Love, 2001, [Pharm-policy] TAC/Oxfam/MSF on Reporting on Brazil Case

4. Oxfam Letter to Zoellick, 2001

5. CIA World Factbook, 2000

6. US Census Bureau, 1991

7. UNAIDS/WHO Epidemiological Fact Sheet, 2000

8. Oxfam Policy Papers, 2001

9. Ibid

10. Colitt, Business Day - First Edition, 2001; Bellos, The Guardian, 2001

11. World Trade Organization, November 14, 2001, Ministerial Conference

12. Barbosa, 2001, Brazilian Embassy Website - Trade Section

13. Chequer, 1998, Johns Hopkins University II Brazil Conference on HIV/AIDS

Web Sources:

Brazilian Embassy in Washington - Human Rights

Joint United Nations Programme on HIV/AIDS

Consumer Project on Technology - Brazil

Oxfam Great Britain

Oxfam Policy Papers - Drug Companies vs. Brazil

II Brazil Johns Hopkins University Conference on HIV/AIDS

Permanent Mission of Brazil to the United Nations

CIA World Factbook - Brazil

World Trade Organization

WTO Declaration on the TRIPS Agreement and Public Health

U.S. Barriers on Brazilian Goods and Services

Brazilian American Chamber of Commerce, Inc. - Brazilian Trade Report

U.S. Trade Representative - 2001 Special 301 Report

United States International Trade Commission

U.S. Census Bureau - Foreign Trade Statistics