Measure should be the last resort in trade war as it creates legal uncertainty and hurts investments.
The discussion on this topic intensified last week after the U.S. President Donald Trump announced a 50% tariff on Brazilian exports starting August 1. In response, Brazilian President Luiz Inácio Lula da Silva signed a decree enacting the Economic Reciprocity Law. The document outlines the circumstances under which Brazil may respond to unilateral sanctions that hinder its economic development. The law specifies criteria for suspending trade concessions, investments, and obligations related to intellectual property rights.
The possible suspension of intellectual property rights in Brazil’s pharmaceutical industry could trigger a broader negative domino effect that reaches far beyond Brazil and the U.S., according to sector specialists. Although such a move is seen as exceptional and unlikely for now, analysts warn that patents remain a cornerstone of investment in research and development.
Pharmaceutical companies contacted by Valor — including Pfizer, Novo Nordisk, Eli Lilly, Bayer, and EMS — declined to comment directly, stating only that they are following the positions of their respective industry associations. Brazil’s Ministry of Development, Industry, Trade and Services (MDIC) emphasized that “any proposal for exceptional and provisional action” would be evaluated by the Interministerial Committee on Economic and Trade Negotiation and Countermeasures, which “may consult with the private sector and other federal agencies before making a decision.”
The central role of patents in corporate financial performance and as an incentive for innovation was at the heart of a statement issued by Interfarma, Brazil’s research-based pharmaceutical industry association.
“Granting compulsory licenses or reducing patent terms could harm R&D investment and the economic viability of companies operating in Brazil,”
it warned.
Novo Nordisk, which last week took its battle to extend the patent for semaglutide to Brazil’s Superior Court of Justice (STJ), noted in February that it invests heavily in new molecules — without guarantees of success.
“It is patent protection that enables the development of new medicines, which in turn are the foundation for future biosimilars and generics,”
the company stated.
A report from the Brazilian Fine Chemical Industry Association (Abifina), published in late June, projects that more than 1,000 drugs will lose patent protection in Brazil over the next five years — a multibillion-real market shift.
Fábio Couto, intellectual property partner at Veirano Advogados, said the move could bring some medium-term gains for Brazil’s generics industry and reduce public healthcare costs.
“There are high-cost medicines in the SUS [public health system] that could be mapped for potential domestic production. The generics sector could benefit — if it has the capacity,”
he said.
Other experts point out that theEconomic Reciprocity Law does not explicitly mention “patents” or compulsory licenses, which Brazil’s 1996 Intellectual Property Law allows only in public health emergencies, with compensation to the patent holder.
The only precedent occurred in May 2007, when the federal government bypassed Merck’s patent on Efavirenz for HIV treatment. Brazil imported generic versions at $0.45 per pill — significantly lower than Merck’s discounted offer of $1.11 (after a 30% price cut from $1.59).
Patent suspension resurfaced during the COVID-19 pandemic, when legislation reiterated that IP waivers could be applied to vaccines and treatments during public health crises.
Ms. Cagnoni, founder of A2C Legal, stressed that using such measures outside a health emergency could erode Brazil’s legal predictability. Mr. Couto agreed, noting that “this is a drastic measure via an uncommon route. The legal risk is high, and Brazil’s regulatory environment could face intense pressure, both domestically and internationally — from investment decisions to its global image as a protector of IP rights.”
Both experts and industry representatives agree that suspending IP rights should remain a last resort. Interfarma emphasized the “exceptional” nature of such action, as stated in the law. The association also urged the government to “formally consult with patent holders before announcing any measures” — a step also mandated in the legislation. Article 5 requires public consultations and the collection of suggestions on possible countermeasures.
Source: Valor International
