Recently, on the Open Budgets Blog, there was a discussion on the implicit tradeoffs in funding a high-profile disease like HIV instead of less severe diseases like pneumonia, which actually kill more people per year worldwide.

In addition to allocation decisions, the price paid for the relevant drugs is also an important variable determining which services and how many services are delivered. Brazil’s success in accessing affordable HIV treatment by manufacturing generics domestically and bargaining with pharmaceutical companies for discounts on imported medicines is an important example. According to an article published in Health Affairs, Brazil saved more than 1 billion dollars through their innovative methods in accessing anti-retroviral drugs.

In the early 1990s, Brazil passed a law that guaranteed free HIV and AIDS treatment to all its citizens. To make good on this guarantee, a Brazilian public laboratory produced cheap generics of anti-retrovirals and continued to do so after finding loopholes in a 1996 law on pharmaceutical patents. The law, which went into effect in 1997, did not protect patents of medicines produced before that year.

In 1998, when Merck produced the new anti-retroviral Efavirenz, selling it at exorbitant prices, Brazil threatened to manufacture generics of the brand if Merck didn’t provide discounts. In the end, Brazil received 40 to 65 percent discounts on both Efavirenz and Nelfinavin, another HIV treatment produced by the company Roche.

Of course, Brazil’s tactics didn’t go without its fair share of critics, mostly pharmaceutical companies and mostly American. In 2001, every U.N. member, except the United States, approved a Brazilian resolution that asked countries not to “deny or limit equal access for all persons to preventative, curative, or palliative pharmaceutical or medical technologies used to treat pandemics such as HIV/AIDS.”

The battle for generics has taken another interesting turn when the EU, the United States, Canada, Japan, Australia, and New Zealand met in the summer of 2009 to discuss plans for a new Anti-Counterfeiting Trade Agreement (ACTA). Oxfam International speculated in a press release that the highly secretive nature of the talks–which will continue through 2010–and the fact that Brazil was specifically excluded, indicates a probable move toward criminalizing generics.

Addressing the concern about balancing world health issues and their respective price tags, “How?” is just as important as “How much?”

This guest post was prepared by Raine Parkerwho blogs at