The deadline set by Brazilian Government is round the corner, there was no sign of an agreement with Abbot Laboratories that, despite a threat by Brazil to break the company's patent, has refused to lower the price or license the manufacture of its own AIDS drug, Kaletra.

The government has also asked US pharmaceutical companies Merck & Co. and Gilead Sciences to reduce prices or allow the production of generic equivalents of their AIDS fighting drugs.

According to sources, the government is optimistic to have a one-year license to produce anti-AIDS drugs from Whitehouse Station, New Jersey-based Merck & Co., and Foster City, California-based Gilead Sciences.

Brazil issued an ultimatum last Friday, giving Abbot until July 6 to comply. If no agreement is reached, the government has said it would break the patent on the medications, which are provided for free to anyone needing them. Brazilian officials argue that Kaletra is too expensive, and producing a local version would cut the country's health care costs significantly.

Brazil, however, says the World Trade Organization allows the government to declare some drugs a national necessity and break patents to produce generic versions. Officials say that local production of Kaletra would save Brazil US$55 million (€45.6 million), which Abbott has refused to match.

The drugs —Abbott's combination pill, Lopinavir and Ritonavir, Merck's Efavirenz, and Gilead Science's Tenofovir —will cost Brazil an estimated US$169 million (€127 million) this year. That represents 67 percent of the government's budget for imported AIDS drugs.

Brazil's national laboratory Farmanguinhos in Rio de Janeiro is expected to start producing Kaletra if the Abbot, Illinois-based Abbott, does not present a counteroffer. Brazil now pays Abbott US$1.17 (€0.97) for each Kaletra pill and says it can produce the drug here at about half that price.

Abbott said that "a compulsory license is not in the best interest of Brazilian patients" and that the decision would have "negative consequences for the global discovery and development of future treatment for all disease areas."

The country has registered 360,000 cases of AIDS since 1980, when the disease was first detected. More than half the victims have died.