Milne said the drug companies ran a big risk in pursuing the case because a courtroom loss would have set a global precedent. The South African government has pledged to consult the pharmaceutical companies in drafting the law and to honor international trade agreements. The World Trade Organization allows countries to import or make generic drugs in an emergency, but what constitutes such a crisis has never been clearly defined. Brazil wasn't breaking any laws by importing generic drugs because Merck's products weren't patented there, a situation that exists for many AIDS drugs in Africa. Analysts say it is problematic for generic versions of widely patented drugs to be circulating, even in small sales markets like Africa, because it weakens the patent process.
Patents are the basis for high drug prices.
The companies say the revenue allows them to recoup development costs and generate profits to fund new medicines. Pharmaceutical executives are quick to point out that this system created the AIDS drugs in the first place. AIDS activists have been calling for drug companies to offer cheap drug-licensing agreements to poor countries. Drug companies have powerful allies in their effort to keep generics at bay. Harvard economist Jeffrey Sachs, who is active in the African AIDS fight, agreed it was important to respect patent rights while solving the crisis.