Brazil's president has authorised the country to bypass the patent on an Aids drug manufactured by Merck, a US pharmaceutical giant.
The country will import a cheaper, generic Indian-made version of the patented Efavirenz drug.
The decision came after talks between Brazil and the US company broke down.
Merck had offered Brazil a 30% discount on the cost of the drugs but the country wanted to pay the same price as Thailand, which gets a larger discount.
Small royalty
Merck offered Brazil almost a third off the cost - pricing the pills at $1.10 (£0.55) instead of $1.59.
But Brazil wanted its discount pegged at same level as Thailand, which pays just $0.65 per pill.
Now, though, it will source Indian-made versions of Efavirenz for just $0.45 each.
"From an ethical point of view the price difference is grotesque," said President Luiz Inacio Lula da Silva.
"And from a political point of view, it represents a lack of respect, as though a sick Brazilian is inferior," he added.
He said that the compulsory licensing of Efavirenz was a legitimate and necessary measure to guarantee that all patients had access to the drug.
Brazil's decision means that Merck, which holds the patent for the drugs, will only get a small royalty for the generic versions of the drugs purchased. Under Brazilian law and rules established by the World Health Organisation, such a licence can be granted in a health emergency or if the pharmaceutical industry abuses its pricing.
'Advancing access'
Some 75,000 Brazilians use Efavirenz, out of a total of 180,000 people who receive free antiretroviral drugs from the government.
Aids activists in the country welcomed the decision.
"This is certainly an important advance in terms of widening access. We are very happy that Brazil is moving in the right direction," said Michel Lotrowska of NGO Medecins Sans Frontieres.
Thailand's decision to break Merck's Efavirenz patent, as well as drugs produced by two other firms, led to the country being placed on a US list of copyright violators.
The company said that Brazil's decision could discourage pharmaceutical firms from investing in treatments for illnesses prevalent in the developing world.
Brazil's move, Merck said, sent "a chilling signal to research-based companies about the attractiveness of undertaking risky research on diseases that affect the developing world."
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