ARV DrugsARV Drugs::Brazilian Innovation Brazilian Innovation

System and the System and the Importance for BRICS Importance for BRICS

CountriesCountriesJosé Eduardo Cassiolato

Luiz Antônio Elias

Graziela Ferrero Zucoloto

Main objective: to Main objective: to present the Brazilian present the Brazilian Innovation System in ARV Drugs:Innovation System in ARV Drugs:

General characteristics:General characteristics:

WorldWorld::

- 40 million people living with Aids- 40 million people living with Aids

- Sub-Saharan Africa: around 2/3 of total - Sub-Saharan Africa: around 2/3 of total cases in the world (25,4 million); 3/4 cases in the world (25,4 million); 3/4 female. female.

BrazilBrazil::

433 thousand cases of Aids (1980-2006 / 433 thousand cases of Aids (1980-2006 / Health Ministry)Health Ministry)

Fonte: PN STDFonte: PN STD--AIDS/SVS/MHAIDS/SVS/MH

224

305336

303

232

179 181203

395

0

50

100

150

200

250

300

350

400

450

1997 1998 1999 2000 2001 2002 2003 2004 2005*

Gas

tos

(US$

m

ilhõe

s))

0

20

40

60

80

100

120

140

160

180

200

Nú

mer

ode

pa

cien

tes

(mil)

Gasto (US$milhões) Média do número de pacientes (mil)

* Previsão* Previsão

Year Value (R$

millon)

1996 14

1997 149

1998 219

1999 487

2000 556

2001 515

2002 612

2003 551

2004 621

2005 945Source: Health Ministry

Public Expenditures on the Aquisition of ARV Drugs

ARVs ProducersParticipation of labs in the production of ARVs purchased

by “National Program / Aids” (Health Ministry)units

Source: Health Ministry

Obs: in 2005 the aquisitions were complemented by Unicef and other institutions.

43,1%

52,0%

56,3%

43,1%

12,3%

56,9%

47,2%

48,6%

59,3%

43,4%

38,3%38,3%

7,1%1,8%

6,4%

4,3%

15,8%

7,7%1,9%2,3%0,0%

39,5%

51,0%

39,1%

37,3%

36,4%

40,8%

53,9%

59,9%

45,7%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005*

Public Labs Private Domestic Labs

Foreign Labs

Production of ARVsParticipation of labs in the production of ARVs purchased by Health

Ministry -Value of production

Source: Health Ministry

81,7%

22,0%

27,3%23,6%

16,6%

25,6%

39,4%

34,7%

25,1%19,5%

19,6%

0,3% 2,0% 0,8% 1,7%

18,9%2,8%

7,7% 11,2%

3,5%5,5%

72,8%

77,0%

63,7%

57,7%57,8%55,4%

75,5%

70,7%

77,7%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Public Labs Private Domestic LabsForeign Labs

Active Pharmaceutical Ingredients

Total Nac. Import. Total Nac. Import. Total Nac. Import.(US$) (US$) (US$)

Anti-retrovirais 20.306.497 8,9% 91,1% 6.508.519 24,6% 75,4% 14.979.657 27,4% 72,6%

Didanosina 2.627.384 3,6% 96,4% 457.771 10,5% 89,5% 0 - -

Estavudina 1.157.894 49,5% 50,5% 316.576 90,0% 10,0% 226.953 49,3% 50,7%

Lamivudina 4.425.345 1,7% 98,3% 2.481.393 18,2% 81,8% 3.213.662 45,2% 54,8%

Sulfato de Indinavir 2.131.448 0,0% 100,0% 0 - - 1.691.207 0,0% 100,0%

Zidovudina 9.964.426 10,7% 89,3% 3.252.779 25,0% 75,0% 9.847.835 25,7% 74,3%

Outros APIs 811.225 15,0% 85,0% 930.925 28,8% 71,2% 558.434 29,6% 70,4%

Total 21.117.722 9,2% 90,8% 7.439.444 25,1% 74,9% 15.538.091 27,4% 72,6%

Public laboratories purchases

Source: Abifina

(%)

2004

(%)

2003

(%)

2005

..

API

S&T Public Infrastructure:Internationally, universities and public research institutes :- are responsible for most innovations in the health sector.

-- ARVs (AZT, ddI, ddC e Abacavir) were created by North American public organizations- concentrate the basic research (riskier and more expensive)- are responsible for the most innovative discoveries, while the private enterprises are proportionally more concentrated in “me-too”

-> Private enterprises: their costs are not as high as they say!

S&T public infrastructure:S&T public infrastructure:

Brazil: - highly qualified research institutions in the

health area: -- Fiocruz; -- 546 research groups in HIV and other

STDs;

- partnership between universities and private enterprises

The role of the StateThe role of the State

-> Public purchases (Law 8.666): obtain the -> Public purchases (Law 8.666): obtain the lowest price (without considering the industrial lowest price (without considering the industrial development)development)

-> Products specifications (APIs):-> Products specifications (APIs):- legally: same technical specifications - legally: same technical specifications - Imports do not respect the required - Imports do not respect the required specifications (around 30%) specifications (around 30%) - Domestic enterprises: purify these APIs -> ↑ - Domestic enterprises: purify these APIs -> ↑ costs not considered.costs not considered.

-> Trend: weakness in national production -> ↓ -> Trend: weakness in national production -> ↓ in bargaining power of the government -in bargaining power of the government ->Tendency: national production not viable -> >Tendency: national production not viable -> ↑ costs↑ costs

Possibilities: - Law of Innovation: If a competitive company realizes locally its R&D, the criterion of the lowest price is eliminated;

-- An increase in the partnerships between companies, universities, and public research institutes.

- Law 11.196: Public bodies can create auctions for the acquisition of products made in Brazil that involve high technology.

In summaryIn summary::

The segment could become competitive if its The segment could become competitive if its relationship with the government were altered: relationship with the government were altered:

- Alteration in the policy of public purchases; - Alteration in the policy of public purchases;

- Stimulation of industrial and technological - Stimulation of industrial and technological development; development;

- Equal laws with imported products – taxing is - Equal laws with imported products – taxing is qualitative. qualitative.

WHO GoalWHO Goal: : to attend until 2010 to the seven to attend until 2010 to the seven million individuals carrying the HIV virusmillion individuals carrying the HIV virus

- With the productive capacity of ARVs - With the productive capacity of ARVs presently existing in the world, this goal will not presently existing in the world, this goal will not be attained be attained -> there exists space in the -> there exists space in the international scene for new producers. international scene for new producers.

Intellectual Property Intellectual Property

- New rules have not increased the technological - New rules have not increased the technological activities in Brazil.activities in Brazil.

There exist legal resources (flexible with There exist legal resources (flexible with safeguards) permitted by TRIPS that are not safeguards) permitted by TRIPS that are not being explored in Brazil:being explored in Brazil:

- Compulsory LicensingCompulsory Licensing -> local production of -> local production of drugs patented without authorization by the drugs patented without authorization by the holder of the patent. holder of the patent.

Threat from CL: Threat from CL: - Believable only if the country has productive Believable only if the country has productive

capacity;capacity;- Fundamental to negotiate with the MNCs. Fundamental to negotiate with the MNCs.

- Chance of retaliation?Chance of retaliation?

ConclusionsConclusions

- Presently, Brazil has the capacity to produce - Presently, Brazil has the capacity to produce ARVs. ARVs. - There are few technical - There are few technical bottlenecks.bottlenecks.

- But Brazil tends to lose this capacity for the - But Brazil tends to lose this capacity for the following reasons:following reasons:

- Public policies don’t give enough - Public policies don’t give enough privileges for technical-industrial developmentprivileges for technical-industrial development

- It doesn’t utilize the flexibility permitted - It doesn’t utilize the flexibility permitted by TRIPS. by TRIPS.

Brazil, India e South AfricaBrazil, India e South Africa

MainMain interests in the production of ARVs: interests in the production of ARVs: - Lowering the costs, making the treatment viable - Lowering the costs, making the treatment viable - Strengthen national industries. Strengthen national industries. IBAS:IBAS:

- Generate new partnerships between - Generate new partnerships between these countries on questions related to AIDS. these countries on questions related to AIDS.

- Negotiation with multinational - Negotiation with multinational companies. companies.

South Africa:South Africa:- AIDS : a grave epidemic- AIDS : a grave epidemic- Strict patent legislation without this having - Strict patent legislation without this having culminated in a strengthening of national culminated in a strengthening of national production. production.

Brazil, India and South AfricaBrazil, India and South Africa

IndiaIndia: : - took advantage of the period of transition - took advantage of the period of transition permitted by TRIPS. permitted by TRIPS. - Via reverse engineering, India developed a - Via reverse engineering, India developed a competitive industry of generics and API:competitive industry of generics and API:- Currently, it possesses several prominent - Currently, it possesses several prominent pharmaceutical companies. pharmaceutical companies. - With complete adoption of TRIPS, how will - With complete adoption of TRIPS, how will this industry continue being competitive? this industry continue being competitive? - Could the Indian competitiveness be a - Could the Indian competitiveness be a threat to the development of the Brazilian threat to the development of the Brazilian industry? industry?