Francisco Viegas Neves da Silva¹;Ronaldo Hallal² and André Guimarães²

International Cooperation Unit¹Care and Quality of Life Unit²

Department of STD, AIDS and VHSecretariat for Health Surveillance

Ministry of Health

Compulsory License and Access to Medicines: Economics

Savings of Efavirenz in Brazil

XIX – International AIDS Conference (Washington - July/2012)

Brazilian Health System

• 1988’s Constitution – “Health is a citizens right and a duty of the State”

• Universal Access to ARV Law issued in 1996

• Strong participation of Civil Society in the National HIV response

• Industrial Property Law 1996

Efavirenz background

• Patented in Brazil in 1996. (PP1100250-6 and PI9608839-7). Main patent expires in August/2012. (pipeline)

• 75 thousand patients on EFV in 2007.

• In 2007, after more than 8 price negotiation meetings the patent owner initially offered a price of US$1.59 per pill at the end offered a price reduction of 30% (US$1.11 per pill).

• At the same time the patent owner was supplying EFV to Thailand at the cost of US$ 0.65 per pill.

• Brazil considered this unacceptable.

• Ordinance 886 of the MOH of Brazil (24/april/2007) – public interest.

• Presidential Decree nº 6.108 (04/may/2007) –”compulsory license, on the ground of public interest, of Efavirenz’s patents, for public non-commercial use”- Duration: 5 years, allowing extension for equal period- Royaltiy fee for the patent owner (1,5% on the cost of the finished product)- Patent owner obligated to transfer knowledge and information necessary to reproduce the patented medicine

• Renewal of CL by the Decree nº. 7723 (04/may/2012)

Compulsory License legal framework

What is a compulsory license?

Compulsory licensing is when a government allows someone else to produce the patented product or process without the consent of the patent owner. A royalty fee is paid to compensate the patent owner. It is one of the flexibilities on patent protection included in the WTO’s agreement on intellectual property — the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement.

(Source: World Trade Organization)

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5.000.000,00

10.000.000,00

15.000.000,00

20.000.000,00

25.000.000,00

30.000.000,00

35.000.000,00

40.000.000,00

45.000.000,00

50.000.000,00

2003 2004 2005 2006 2007 2008 2009 2010 20110

20.000

40.000

60.000

80.000

100.000

120.000

Total Cost/US$

Patients per year

EFAVIRENZ 600mg

Year

EFV

600m

g To

tal

Exp

endi

ture

s

Num

ber o

f pati

ents

on

EFV

600m

g

Trends of expenditures and patients per year

CL

National production

Effects of the Compulsory License

US$/Pill

-

0,50

1,00

1,50

2,00

2,50

2003 2004 2005 2006 2007 2008 2009 2010 2011

US$/Pill

Evolution of prices EFV 600mg

CL National production

Total patients and costs of EFV

-

5.000.000,00

10.000.000,00

15.000.000,00

20.000.000,00

25.000.000,00

30.000.000,00

35.000.000,00

40.000.000,00

45.000.000,00

-

20.000

40.000

60.000

80.000

100.000

120.000

EFV 600mg

EFV 200mg

TOTAL OF P ATIENTSYear

Efav

irenz

's Co

st (U

S$)

Patie

nts o

n Tr

eatm

ent

• EFV 200mg annual cost per patient1999 = US$2,544 (inclusion) 2007 = US$259 (after CL)2012 = US$107 (international suppliers)

• EFV 600mg annual cost per patient2003 = US$772 (inclusion) 2007 = US$158.78 (after CL)2009 = US$279 (national production)2011 = US$294

Explanation

Table

Year* Quantity Total Cost with CL** Total Cost without CL***2007 666.000 150.090,06USD 406.260,00USD 2008 720.000 124.711,02USD 439.200,00USD 2009 - -USD -USD 2010 330.030 57.549,64USD 201.318,30USD 2011 504.000 50.081,72USD 307.440,00USD

TOTAL 2.220.030 382.432,45USD 1.354.218,30USD

Year* Quantity Total Cost with CL** Total Cost without CL****2007 42.989.880 19.576.985,13USD 47.890.726,32USD 2008 31.000.020 13.425.280,19USD 34.534.022,28USD 2009 42.000.000 23.195.580,36USD 46.788.000,00USD 2010 20.775.000 4.175.244,41USD 23.143.350,00USD 2011 21.015.000 12.798.135,00USD 23.410.710,00USD

TOTAL 157.779.900 73.171.225,10USD 175.766.808,60USD

TOTAL 159.999.930 73.553.657,54USD 177.121.026,90USD

* Year of the purchase (contract)

EFV 200 mgTotal savings with CL

28.313.741,19USD

256.169,94USD 314.488,98USD

-USD 143.768,66USD

102.595.583,50USD

Total savings with CL

257.358,28USD 971.785,85USD

EFV 600 mg (national and international suppliers)

21.108.742,09USD 23.592.419,64USD 18.968.105,59USD 10.612.575,00USD

*** EFV 200mg reference price of US$ 0.61 per pill (price of the last purchase in 2006)

103.567.369,36USD

** Includes royalties of 1.5%.

**** EFV 600mg reference price of US$1.11 per pill. Last price of EFV purchased in 2006 (US$1.59 per pill) minus 30% (discount offered by patent owner).

Conclusion

• Total savings from 2007-2011 with the Compulsory License was around US$ 103,600,000. (includes savings of EFV 200mg)

• With the Compulsory License Brazil has saved 58,47% buying from generic suppliers.

• International prices are still lower than the ones offered to Brazil;

• Intellectual property is a significant element of price negotiation;

• It is necessary the full use and implementation of TRIPS flexibilities such as Compulsory Licenses to increase access to medicines.

• Brazil has shown that increasing access is more important than economics.

Challenges and conclusion

Obrigado!

Thank you very much!

francisco.viegas@aids.gov.br