DRUG INDUSTRY PRAISES BRAZIL PATENT DECISION

The Brazilian government's startling decision to end its threat to break patents on Abbott Laboratories' HIV/AIDS drug Kaletra has won international praise. Industry observers, however, caution that the controversial issue of compulsory licensing is likely to resurface elsewhere.

Full details of the agreement reached after intense negotiations between the US drugmaker and Brazilian officials on Friday night are still elusive, although it seems Abbott has agreed to a five-year price freeze, as opposed to an immediate cut. The plan could also work in Brazil's favour, assuming that the country's currently strong economic and currency performance remains on track until the end of the decade. Both sides have now claimed victory.

According to a statement on Abbott Laboratories' website, the deal does not specify a "per capsule price," and does not represent a "significant" price cut. Reports claim that Abbott has agreed to the production of a generic version of Kaletra after 2015, by which time patents on the drug and its successor formulations are likely to approach expiry.

Despite the warm welcome given to the deal, which creates something of a precedent for the amicable resolution of such disputes, some of those involved have sounded a note of caution. In 2001 the Brazilian government successfully secured a price cut on Roche's ARV Nelfinavir, and there are fears that other countries may attempt to compulsorily license HIV/AIDS drugs under the "emergency" provisions of TRIPS.