Globalist Paper

The Brazilian Model to Fight HIV/AIDS

Why do Brazil’s HIV/AIDS policies have many drug companies worried?

A different Brazilian model.

Takeaways


The downside of globalization is its tendency to allocate costs and risks upon the poorest and the powerless. Nowhere is this tendency more evident than in the global experience with AIDS.

Too often, the HIV virus has spread across borders while most of its victims remain locked in the poorest of countries with few prevention programs and inadequate treatment.

At the same time, globalization also creates unprecedented opportunities to advance human welfare, even for those marginalized and impoverished by many of its economic structures and political institutions.

This was precisely the globalization advocated by Dr. Peter Piot, UNAIDS Executive Director, at the 2004 Brazilian AIDS conference in Recife. “What we need is a globalization that is not only dealing with markets and profits, but also a globalization of access to global public goods for the benefit of all, for the benefit of the poor, for the least powerful.”

Brazil’s global leadership in the fight against AIDS demonstrates this promise of globalization. Based on its constitutional recognition of the right to health and its own battle with AIDS, this nation has ultimately managed to galvanize human cooperation and solidarity across borders and institutions.

AIDS invaded Brazil as the military retreated from its authoritarian rule in the early 1980s. The country’s transition to civilian rule in 1985 coincided with a growing clamor for a government response to the incipient AIDS epidemic.

Led by AIDS patients, their families and a growing list of NGOs, Brazilian civil society organizations confronted the AIDS crisis within a broader social and political debate over the right to health and the government’s obligations to provide healthcare.

In 1986, President José Sarney created the National AIDS Program. And in 1988, Brazil enacted a federal constitution which recognized the right to healthcare.

The alarming rate of HIV infection was countered by the increasing concern of policymakers, health professionals and the mobilization of civil society to move the government toward a comprehensive response to the crisis through the public health system.

Despite divergent perspectives, government and civil society teamed up to prevent the transmission of the HIV virus.
The government slashed the tariff on imported condoms to significantly lower the price. Local and state governments worked with NGOs to distribute clean needles and information to intravenous drug users. Yet, these efforts were incomplete as the costs of AIDS treatment skyrocketed due to long hospital stays and the overwhelming price of anti-retroviral drugs (ARVs) produced by pharmaceutical companies, such as Merck, Hoffman-LaRoche, Pfizer and Abbott.

In 1996, then-President Fernando Henrique Cardoso signed legislation mandating the universal distribution of ARVs as the list of AIDS patients grew by approximately 25,000 per year.

By 1997, the annual cost of the ARV drug “cocktail” in Brazil grew to $4,860 per patient, challenging the fiscal health of the government and the right to healthcare. Given the success of the ARVs in lowering overall treatment costs by decreasing expensive hospital stays and stunting HIV transmission rates, the government focused its efforts on getting the price right for the ARV “cocktail.”

During the late 1990s, the Brazilian government had finally negotiated through the maze of governments and institutions to produce generic equivalents of eight of the 13 drugs needed for the ARV cocktail — and to lower the price of those it needed to import in order to guarantee treatment.

Ultimately, Brazil’s right to health and campaign against AIDS required international cooperation from the United States, organizations such as the WTO and the pharmaceutical industry.

Initially, the Cardoso government had faced stiff opposition from the U.S. government, several ARV producers and the U.S.-based Pharmaceutical Research and Manufacturers of America.

In fact, as far back as 1988, the United States had pressed Brazil to adopt legislation to protect the intellectual property of 18 U.S.-based pharmaceutical companies operating in Brazil and holding a 37.5% share of the nation’s drug market.

In October 1988, then-U.S. President Ronald Reagan imposed punitive tariffs on $39 million worth of Brazilian exports to the United States.

In 1989, U.S. Trade Representative Carla Hills designated Brazil as a target for quantitative import restrictions based on this intellectual property issue. In the 1990s, under President Bill Clinton, the United States continued to pressure Brazil to adopt stringent intellectual property legislation as the WTO was formed and set out to develop a Trade-Related Aspects of Intellectual Property Rights (TRIPS) regime.

Faced with U.S. threats of economic sanctions, President Cardoso issued an Executive Order in October 1999 instructing the Minister of Health, José Serra, to grant “compulsory licenses” for the manufacture of ARVs to national pharmaceutical producers — in particular the government’s own lab, Far-Manuinhos.

The Brazilian government argued that its 1996 Industrial Property Law permitted the issue of compulsory licenses for national production in the cases of national emergency and the abuse of economic power.

Cardoso’s order shifted the balance of power toward public need and brought Merck, Hoffman La-Roche and Abbott — the pharmaceutical giants responsible for the supply of four of the major imported drugs for the ARV cocktail — to the negotiating table.

Brazil demanded a price differential in accordance with its developing country status and its commitment to universal coverage.

The companies agreed to a stiff price reduction representing an annual savings of approximately $500 million for the Ministry of Health. This first round of negotiations made the ARV cocktail accessible and affordable for the government’s health system during a period of great fiscal challenge.

In 2001, Brazil’s noteworthy success in fighting AIDS at home offered tangible solutions for the developing world. Brazil achieved universal coverage, treating approximately 135,000 patients by 2004 — or 40% of the entire free drug treatments provided around the globe.

That number stands in stark contrast to the meager 5% of all AIDS patients worldwide that benefit from complete treatment.

During the late 1990s, Brazil was able to reduce the HIV infection rate to 50% of the World Bank’s projected estimate. The number of new cases sharply declined — falling to less than 15,000 per year by 2003. Mortality caused by AIDS had also dropped more than 50% by 1996.

Despite pressure from the United States and the pharmaceutical industry, Brazil modeled a comprehensive response to the AIDS pandemic.

The challenge was to globalize and then adjust the model to national and local environments. Yet, the effort to diffuse Brazil’s model faced significant obstacles.

In January 2001, outgoing U.S. President Bill Clinton activated the WTO’s dispute resolution mechanism to pressure Brazil to step back from its threat of compulsory licensing for national production of the five imported drugs needed for the ARV cocktail.

The Clinton Administration aimed to move the WTO toward greater intellectual property protection by attacking Brazil’s 1996 Industrial Production Law that allowed for compulsory patents and parallel importing (from third countries at significantly lower prices) in exceptional cases. This act served to place private interests, such as those of Merck and Pfizer, above the public interest in combating AIDS.

Brazil responded with a global campaign to find a compromise between intellectual property protection and the need to rapidly expand AIDS treatment and prevention.

In March 2001, Brazil reached agreement with Merck on pricing and continued its negotiations with Hoffman-LaRoche to institute a precedent setting price differential settlement to insure affordability of the ARV cocktail.

In April 2001, Brazil brought its case to the United Nations Human Rights Commission and led the body in a 52 to 0 vote to resolve that access to AIDS treatment was a human right. The United States was the only nation to abstain from the commission’s vote.

In May of that year, Brazil brought its case to the World Health Organization’s Assembly in Geneva and proposed adoption of legislative protections for countries wishing to produce generic versions of the ARV drugs.

Brazil’s negotiating strategy achieved its biggest victory at the United Nations General Assembly Special Session on HIV/AIDS in June 2001.

In tandem with the session, U.S. President George W. Bush agreed to withdraw the WTO complaint filed under the Clinton Administration and create a bi-national consultative committee with Brazil to achieve a settlement.

According to Robert Zoellick, then-U.S. Trade Representative, “The United States has been supportive of Brazil’s bold and effective program to combat the HIV/AIDS crisis. With this positive step, we will be able to harness our common energy toward our shared goal of combating the spread of this dangerous virus.”

The United State’s recognition of Brazil’s success in combating AIDS led to the WTO’s adoption of a special agreement on intellectual property protection and public health, creating the possibility of transforming the Brazilian model into a global effort.

In late 2001, after the 9/11 attack and the outbreak of anthrax in the United States, the United Nations spearheaded the Global Fund to Fight AIDS, Tuberculosis and Malaria.

The Global Fund represents a partnership between nations, IGOs, NGOs and private donors to combat AIDS through a coordinated effort and infrastructure. It represents the globalization of Brazil’s model of harnessing the forces of government and civil society to confront the AIDS challenge.

Brazil continues to demonstrate its leadership in the fight against AIDS under the current administration of President Lula.

In September 2004, the Lula government entered into an agreement with UNAIDS to open up an International Center for Technical Cooperation on AIDS, to be initially funded by the UN and Brazil’s federal government.

Ultimately, the fight against AIDS relies on the continued efforts of Brazil to make globalization work for increasing numbers of people — in particular the poorest.

Toward this end, Brazil’s tested strategy of negotiating globalization is making a big difference in the WTO’s Doha Round trade negotiations and serves as the inspiration behind President Lula’s international leadership of the Action Against Hunger and Poverty, launched at the United Nations in September of 2004 with the support of 130 nations.

Accordingly, Dr. Piot of UNAIDS recognized that, “Twenty years into the AIDS epidemic, the linkages between poverty, hunger and AIDS are now more evident than ever. President Lula has been a global leader in all these fronts.”

Despite the tremendous destruction of AIDS, the epidemic forced Brazil to confront the dangers and opportunities of globalization. Two decades later, the country has made a singularly important contribution to the fight against AIDS and the broader effort to steer the forces of globalization toward meeting the needs of people, even the poorest.

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About Mark S. Langevin

Mark S. Langevin is Director of the Brazil Initiative and a Research Professor at the Elliott School of International Affairs at George Washington University.

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