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Viewing cable 07BRASILIA787, BRAZIL: MERCK REPORTS IMMINENT COMPULSORY LICENSING

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Reference ID Created Released Classification Origin
07BRASILIA787 2007-05-03 21:07 2011-07-11 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Brasilia 
VZCZCXRO4976
PP RUEHRG
DE RUEHBR #0787 1232107
ZNR UUUUU ZZH
P 032107Z MAY 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 8832
INFO RUEHSO/AMCONSUL SAO PAULO 9784
RUEHRI/AMCONSUL RIO DE JANEIRO 4305
RUEHRG/AMCONSUL RECIFE 6598
RUEHBU/AMEMBASSY BUENOS AIRES 4749
RUEHMN/AMEMBASSY MONTEVIDEO 6865
RUEHAC/AMEMBASSY ASUNCION 6074
RUEHSG/AMEMBASSY SANTIAGO 6216
RUEHLP/AMEMBASSY LA PAZ 5327
RUCPDOC/USDOC WASHDC
 
UNCLAS BRASILIA 000787 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT PASS DHHS 
DEPT FOR EB/TPP/IPE JENNIFER BOGER 
DEPT PASS USTR FOR VICTORIA ESPINEL, CHRIS WILSON, SUE CRONIN AND 
JENNIFER CHOE GROVES 
USDOC FOR ITA/MAC/OIPR CASSIE PETERS 
USDOC FOR ITA/MAC/WH/OLAC/MCAMPOS 
AID/W FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: KIPR ETRD ECON BR
SUBJECT:  BRAZIL: MERCK REPORTS IMMINENT COMPULSORY LICENSING 
ACTION 
 
Ref: A) Brasilia 769 B) Previous Embassy emails 
 
1. (SBU) Merck representatives have told EmbOffs that the GOB 
informed their company on May 3 that it would initiate a compulsory 
licensing order for Merck's HIV drug Stocrin (Efavirenz) as early as 
May 3 or the morning of May 4.  According to Merck officials, the 
GOB communicated that any additional offer the company might make at 
this point would be rejected.  The Brazilians use the drug in their 
acclaimed free public treatment program for HIV victims. 
 
2.  (SBU) Since autumn 2005, Merck has been involved in intermittent 
negotiations with the GOB concerning the price of its HIV treatment 
drug.  On April 24 of this year, the GOB served Merck (in accordance 
with TRIPS compulsory licensing requirements) with a "Notification 
of Public Intent" at the end of a negotiating session giving the 
company seven days to respond.  The impetus behind the GOB action 
appears to be its desire to emulate Thailand's recent success in 
reducing the price paid for Stocrin (Efavirenz) to 65 cents per 
pill.  GOB officials have emphasized to EmbOffs that reducing costs 
is the motivation behind their drive towards compulsory licensing. 
 
3.  (SBU) The purported GOB move comes on the heels of an April 26 
Merck offer to cut the price of 30 percent (to $1.10 per pill), 
increase local product of the drug, and provide technology transfer 
two years ahead of the 2012 expiration of the drug's patent.  The 
GOB, however, has rejected this offer. 
 
4.  (SBU) Separately, in a May 3 meeting, Sao Paulo based 
representatives of Pfizer and Bristol, Myers, Squibb (BMS) told 
EconOffs that they felt new Minister of Health Jose Gomes Temporao 
was driven more by ideology than by any concerns regarding future 
damage to Brazil's investment climate as a result of a compulsory 
licensing action.  Both corporate representatives implied that 
Merck's situation was a result of the company's rigid negotiation 
policies over the past few years (strictly protect). 
 
Sobel