By Tim Kingston

Leading South San Francisco biopharmaceutical firm Gilead is in the crosshairs of a campaign by local activists to ensure that 170,000 people with AIDS in Brazil get access to cheap life-saving drugs.

Gilead – with after-tax profits of $157.1 million and total sales of $430.4 million, according to its 2005 first-quarter report – is negotiating with the Brazilian government over voluntarily licensing Viread (tenofovir), the company's premier AIDS treatment, so that it can be made cheaply by Farmanguinhos, the Brazilian government's generic drug manufacturer.

ACT UP/East Bay and Health-Gap activists plan to leaflet the San Francisco AIDS Foundation's AIDS Walk on July 17 to encourage Gilead, an event sponsor, to reach an agreement with Brazil. Activists are also considering picketing Gilead's South San Francisco headquarters later this month if no agreement is reached. "I think they are shocked that people here are raising the issue," ACT UP/East Bay's John Iversen said.

"I can't comment on the process or where we are or what stage we are at," Gilead communications manager Jenna Conley told the Bay Guardian, but she did say that negotiations have been underway for several months.

Viread wholesales at $13.70 per day per person in the United States. Brazilian AIDS activists say the drug costs $5.40 per day per person there, but neither Conley nor the Brazilian embassy would confirm that, citing a joint confidentiality agreement. Gilead voluntarily provides cut-rate Viread to developing nations in Africa and Latin America for 87¢ a day but does not consider Brazil a developing nation and thus will not provide cut-rate drugs. Brazil has high poverty rates, but as a whole is considered a middle-income country with the resources to manufacture its own generic drugs. Brazil currently makes generic versions of eight AIDS drugs and imports nine patented drugs.

For two reasons AIDS activists back the Brazilian effort to manufacture generic versions of AIDS drugs. First, they say worldwide support for Brazil's universal-access AIDS program is essential so it doesn't go bust. "Brazil has the best anti-AIDS program of any of the developing nations," Iversen said. "It is a model for prevention and is the first developing country to provide free anti-HIV drugs." As a result, he said, even "remote villages in rain forests receive high-end, triple-drug combination therapy."

Brazil's need for generics is illustrated by the fact that about two-thirds of its $393.75 million national AIDS budget is consumed by just three second-generation AIDS treatments: Gilead's Viread, Merck and Co.'s Sustiva (efavirenz), and Abbot Laboratories' Kaletra (lopinavir/ritonavir). Brazil is negotiating with Gilead and Merck, but the country's health minister has pledged to formally break Abbott's patent July 6 and slash the price of Kaletra from $1.17 to 68¢ per pill. It's worth noting that Gilead's president and CEO pulled down $18 million in total compensation in 2004, while the CEOs of Merck and Abbot raked in $10 million and $11 million, respectively, that year, according to the AFL-CIO's Executive Paywatch.

The second reason activists support Brazil's generic manufacturing effort is the global impact that Brazilian purchases of raw materials have on the market. Iversen asserted that since generic AIDS treatments hit the market four years ago, prices for first- and second-generation AIDS drugs dropped 95 percent and 70 percent, respectively. Drugs that cost $15,000 annually a few years ago are now $150 to $250 annually.

"It was a radical, radical price decrease," said Rachel Cohen, director of Doctors Without Borders' Campaign for Access to Essential Medicine. "Part of the reason that prices came down is that Brazil, early in the mid- to late 1990s, started to produce locally, so they had to purchase raw materials from somewhere. By making big, big purchases, it affected the entire market because economies of scale were achieved. Countries and state producers elsewhere were also able to pay less for the active ingredients and be able to purchase those drugs for much less."

To its credit Gilead has reduced the price of its HIV treatments by 37 percent and is using manufacturing efficiencies and deals with generic manufacturers in the Bahamas and South Africa to supply cheap Viread to developing countries. Gilead is regarded by AIDS activists as a reasonable corporation to deal with, which may explain why Gilead is still negotiating with Brazil, while Abbot, known for its bottom-line approach, refused even to consider voluntary licensure.

"The only company that has so far not negotiated to reduce the price of their drugs is Abbott," said Flavio Marega of the Brazilian Embassy in Washington, DC. Brazilian health minister Dr. Humberto Costa stressed, in a July 27 speech in Geneva, that Brazil was well within its rights under national and international law to break Abbott's patent on Kaletra. He also suggested, in a same-day interview with Reuters, that the move could encourage Merck and Gilead to come to a swift agreement on voluntary licensure.

"If Brazil fosters generic competition for the three products, that will bring down the global price of generics dramatically and will enable people in other countries to get access to these medications," said Robert Weissman, director of Essential Action in Washington, DC.

If Brazil breaks Abbott's patent July 6, it will mark a victory for countries to protect the health of their citizens over the pharmaceutical industry's right to profit. According to former New England Journal of Medicine editor Dr. Marcial Angell, pharmaceuticals offered an "astonishing" rate of return of 18.5 percent in 2001. Only commercial banking came close, with 13.5 percent profits that year. Not surprisingly drug companies, frequently backed by the US government, now back trade pacts, such as the Central America Free Trade Agreement, that prohibit generic manufacture.

The last thing the industry wants is more Brazils. "The drug industry panics at this," said Ellen Shaffer, codirector of San Francisco's Center for Policy Analysis on Trade and Health. "If drugs become affordable in other areas, why not the US? The pharmaceutical companies are afraid that the policies that make those drugs affordable could filter back to the US."

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