In a move similar to what Thailand has been threatening to do with some of Abbott (NYSE:ABT) and Sanofi-Aventis' (NYSE:SNY) top compounds, Brazil announced yesterday that it would produce or import generic versions of one of Merck's (NYSE:MRK) top HIV compounds unless Merck lowered the price it charged the country for the drug. This announcement came despite the fact that the drug is still under internationally recognized patent protection.

Brazil already receives a steep discount on the price that Merck charges it for its HIV compounds. Nevertheless, it wants still lower prices to help reduce the government's costs associated with supplying drugs to those living with HIV/AIDS.

With the push for cheaper drug prices by circumventing a pharmaceutical company's patents, it's no wonder that drug companies are moving into developing more biologics, which can't be reproduced nearly as easily (if at all), compared to small molecule compounds. AstraZeneca (NYSE:AZN) didn't make any mention of the improved competitive position that biologics have in comparison to small molecule drugs when it made its acquisition of MedImmune (NASDAQ:MEDI) this week, but the proposition that MedImmune's biologics can't be easily reproduced by generic drug manufacturers surely played a part in its decision to acquire the company.

What's at issue here is that many small molecule compounds like HIV/AIDS drugs can be easily reproduced at low cost, and this increases the temptation to ignore their patent protection. While the idea of breaking a patent and stealing a company's intellectual property may seem like a noble cause in the case of providing medicines to the poor, this reduces the long-term incentive for drug companies to innovate and produce new novel therapeutics. The main difference between stealing existing intellectual property protecting marketed drugs and stealing food from farmers to feed the poor is that the former can be done at costs that aren't as visible on the surface, whereas the economic cost of raiding a farm is more calculable.

Or, to put it another way, I'm sure Brazil's government and Petrobras (NYSE:PBR) wouldn't be too happy if the United States expropriated Brazil's vast oil reserves to counteract the sky-high gasoline and oil prices that U.S. consumers are experiencing. So why is it acceptable to expropriate U.S corporations' patent estates and hurt the pharmaceutical industry worldwide?

Looking for more Foolish drug stock coverage? Check out the Fool's market-beating Rule Breakers newsletter. You can check out all our recommendations as well as get access to our message boards and exclusive content with a 30-day free trial.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.