As we reported two weeks ago, at a time when drug prices are soaring to the point where the average person can no longer afford them, the Brazilian government actually threatened to do something about it.

Brazilian Health Minister Humberto Costa announced that the price of the anti-AIDS drug Kaletra was so high that it posed a risk to public health. Under Brazilian law, the government has the authority to ignore the patent held by U.S. based Abbott Laboratories in order to allow generic copies of the drug to be made in the country’s state-run lab in Rio de Janeiro.

Abbott was given 10 days to cut the price of the drug to an affordable level for the 600,000 Brazilians who suffer from HIV/AIDS.

Abbott claimed it was already selling its drugs in Brazil at a financial loss and argued the move would not be in the long-term best interests of patients. It showed it was taking the ultimatum seriously though when it stated it was “willing to work with the government to find a mutually agreeable solution.”

Brazil has won international praise for its policy of providing free anti-retroviral drugs to anyone who needs them. By pressuring a major pharmaceutical company to lower its price, even on one important drug, Brazil sent a strong message to an industry that has always placed profit above compassion.

Over the past two weeks, Abbott Labs attempted to take the position that it would not be bullied into cutting its price by Brazil. As the deadline approached, however, Abbott realized the government was not backing down on its threat to break Abbott’s patent on the most prescribed protease inhibitor used in the treatment of HIV.

Thus, in order to protect its intellectual property in a drug with 10 years remaining on its patent, Abbott Labs flinched and rolled back the price of the drug to a point where it was acceptable to the Brazilian government.

Although the financial terms of the agreement were not disclosed, Abbott indicated the price would be calculated on the number of people using the drug instead of per-capsule. Brazil’s Health Ministry did state that the new agreement would save Brazil $18 million next year and $259 million during the next six years.

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