Brazil has issued a compulsory license for the medicine Efavirenz, an important anti-retroviral. See the story here. Brazil had negotiated with Merck for a couple of years, and failed to reach agreement on price. Apparently, Brazil would have been satisfied with the same price charged in Thailand, but Merck felt that Brazil could afford more. These negotiations take place under the shadow of Article 31(h) of TRIPS:
(h) the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization;
I am not sure that anyone knows precisely what this language means. But one argument is that "economic value" means "fair market value." Merck would also argue that "adequate" means what it is defined to mean in BITs: fair market value. See the U.S. model BIT. Of course, Brazil would counter that the BIT definition is neither customary international law nor applicable in TRIPS. If the "fair market value" is calculated based on the state imposing the compulsory license, then Merck may have a point in arguing that the Thai price is not determinative for Brazil.
