Abbott Laboratories is facing a 10-day ultimatum issued by Brazil’s government to lower its price for the AIDS drug Kaletra by close to 50%.

Brazil’s health minister, Humberto Costa, has declared Abbott’s protease inhibitor as “public interest,” in which case Brazilian patent law provides for “obligatory licensing.” Costa cites the 2001 Doha Declaration, which allows “countries to take measures to protect public health.”

If no agreement with Abbott is reached, Brazil plans to break the patent and produce a cheaper generic version of the drug program in its state-run Farmanguinhos Laboratory for use in the country’s HIV/AIDS treatment program.

In a statement, Abbott says the Brazilian government “does not have a legal basis” to issue a compulsory license and that this practice is “not in the best interest of Brazilian patients” nor of the drug discovery and development process, which “depends on the reasonable return on investment for existing treatments.”

Abbott also points out that alternative formulations of HIV medications can have “significant consequences for patients, such as the development of viral resistance.”

Kaletra is Abbott’s third-best-selling drug. In 2004, it drew revenues of $896 million in worldwide sales, $398 million in the U.S. and $498 million in the rest of the world. Kaletra sales last year rose 19.2% over 2003.