Brazil rejects Merck price offer for AIDS drug

BRASILIA (Reuters) - Brazil's president is to decide whether his country will honor Merck & Co's AIDS drug patent, after the health ministry rejected the company's price-cut.

"We consider the offer insufficient and we told the manufacturer," Brazil's health minister, Jose Temporao, told Reuters on Thursday. "The decision (on whether to break the patent) is now being analyzed by the president."

The government said last week it was considering importing generic versions of the drug, Efavirenz, for Brazil's lauded AIDS treatment program if it decides not to honor the patent. It has not mentioned any plans to make the drug locally. Brazil has threatened to break patents before, but has hammered out deals in the end.

Under World Trade Organization rules, a country can sidestep patents by issuing a "compulsory license," which allows production and imports of generic drugs for public health and national emergencies. Brazil declared the drug "in the public interest" and too expensive to buy.

Brazil wanted Merck to cut the price of Efavirenz to $0.65 per pill -- the same price paid by Thailand -- from $1.57 per pill paid by Brazil, the ministry said.

A source close to the negotiations said the New Jersey-based drugmaker has since come back with an offer of $1.10 a patient per day, but Brazil rebuffed that bid. The source said the talks were at an impasse.

Merck sells the drug for $1.80 per day in most middle-income countries, according to the company.

"We at Merck are disappointed to have had what we considered to be a fair offer rejected by the government of Brazil," Merck spokeswoman Amy Rose said, adding that Merck had repeatedly requested a face-to-face meeting with the health ministry to "further explore a mutually acceptable agreement".

(Additional reporting by Kim Dixon in Chicago and Ricardo Amaral in Brasilia)