UPDATE 1-Brazil may reject Gilead's AIDS drug patent

(Adds data on Tenofovir use in Brazil, background)

By Maria Pia Palermo

RIO DE JANEIRO, April 10 (Reuters) - Brazil has decreed U.S. pharmaceutical firm Gilead's (GILD.O: Quote, Profile, Research, Stock Buzz) AIDS drug Tenofovir "in the public interest", signaling it may reject a patent request due to its high price and import a generic version.

The Health Ministry said in a decree published on Wednesday that patenting the drug in Brazil would generate "expectations of monopoly rights with an impact on the price of the product."

Latin America's largest country has an internationally-lauded AIDS prevention and treatment program, in which patients get free antiretroviral treatment.

The ministry said it had requested a priority examination of the patent filing by the company with the Brazilian INPI patent body, which will have to take into account the ministry's objections.

"If no patent is issued, Brazil will be free to negotiate prices of the drug, be it generic or brand name," a health ministry source told Reuters on Thursday, adding that the case was "not about compulsory licensing" or breaking patents.

A representative of Gilead Sciences Inc in Brazil declined to comment on the issue but said high-ranking Gilead officials were in contact with the ministry to discuss the case.

The Health Ministry said Tenofovir accounts for 10 percent of the money the government spends on its AIDS treatment program, which encompasses a cocktail of various drugs, including Tenofovir in some cases.