Brazil agreed to an offer today from Abbott Labs to cut the price of its Kaletra AIDS drug by 29.5 percent, a move to keep poorer countries from breaking patents and buying generic substitutes, Reuters reports. The lower price for Kaletra, a combination of lopinavir and ritonavir, will save Brazil about $10 million a year in costs for its AIDS treatment program.

The two sides reached agreement on the Abbott offer, which was extended to dozens of other countries, one month after President Luiz Inacio Lula da Silva authorized Brazil to break the patent on an AIDS drug for the first time. Thailand has bypassed patents on several drugs over the past year and is locked in a battle with Abbott, which has threatened not to sell any new meds to the Asian nation.

Brazil broke a patent in May after talks broke down with Merck and now imports a generic version of efavirenz, Merck’s Stocrin, from India. “The difference between the two cases was that Abbott sought an understanding with the Brazilian government,” Health Minister Jose Temporao said at a news conference with Abbott execs. “It would be very promising if Abbott’s example were to be followed by other laboratories.”

Under WTO rules, countries can issue a “compulsory license” to manufacture or buy generic versions of patented drugs deemed critical to public health. But drugmakers often cut prices to retain developing countries as buyers of lucrative drugs and avoid compulsory licenses. “It would be very promising if Abbott’s example were to be followed by other laboratories,” Temporao said.

Brazil provides free universal access to AIDS drugs and condoms under a widely praised prevention and treatment program. The program helped Brazil slow infection rates and avoid what experts said could become an AIDS epidemic. Infection rates among adults have stabilized at levels similar to those in the United States.

But government spending on anti-retroviral drugs doubled in four years to nearly 1 billion reais (US$495 million) in 2005, according to a Brazilian report for the United Nations. Abbott said Brazil would spend about $1,000 per year for each patient taking its drug.

Temporao, who took office in March, has criticized high-priced drugs. He has also slashed prices on birth control pills, told men to get vasectomies and angered Roman Catholic leaders by calling for a referendum on whether Brazil should legalize abortion. On Wednesday, he said price talks were ongoing with many pharmaceutical companies and that Brazil would like to produce more drugs domestically.

Abbott cut the price for Kaletra tablets, which currently have no generic equivalent, from a previously agreed $1.04 per pill to 73 cents per pill this year and 63 cents in 2008. Heather Mason, Abbott’s vp for Latin America Heather Mason, says the drugmaker offered to cut prices for the tablets, which do not require refrigeration, for 45 middle-to lower-income developing nations. “It’s a win-win situation.”

Brazil will start offering Kaletra tablets to about 32,000 patients in September, phasing out the use of capsules.