WASHINGTON, Nov 13 (Reuters) - Brazil's policy of haggling long and hard for lower prices for lifesaving AIDS drugs saved the country $1 billion between 2001 and 2005, U.S. researchers estimated on Tuesday.

Amy Nunn and colleagues at the Harvard School of Public Health analyzed the costs of individual AIDS drugs in Brazil and found that generic drugs produced in Brazil were usually more expensive than similar drugs made elsewhere.

But, by negotiating for lower patented drug prices, Brazil had lowered the overall average costs for AIDS drugs.

"Brazil's AIDS treatment program has been cited widely as the developing world's largest and most successful AIDS treatment program," they wrote in their report, published in the Public Library of Science journal PLoS Medicine.

"The program guarantees free access to highly active antiretroviral therapy (HAART) for all people living with HIV/AIDS in need of treatment."

The program, begun in 1996, now covers 180,000 Brazilians and also provides free condoms. It has helped slow infection rates to a stable 0.6 percent of the population -- similar to rates seen in the United States.

Brazil produces generic versions of eight non-patented AIDS drugs.

It has used the threat of generic drugs to persuade companies to lower their prices for expensive AIDS drugs, even though Brazil has signed on to World Trade Organization patent agreements.

Last May, Brazil broke the patent on Merck & Co. Inc.'s <MRK.N> efavirenz to import a cheaper generic version from India instead.

Other countries, including Canada and Italy, have also used a clause in World Trade Organization rules to flout drug patents in the name of public health.

In July, Brazil worked out an agreement with Abbott Laboratories Inc. <ABT.N> to cut the price of its drug Kaletra by 29.5 percent.

(Reporting by Maggie Fox, editing by Will Dunham and David Wiessler)

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