THE PROSPECT OF BIOTERRORISM on a massive scale has painted the Bush administration into a corner, as it tried to address demands for price reductions on the anti-anthrax drug Cipro while maintaining an anti-generics position in international trade negotiations.
When the anthrax scare first hit. Cipro was understood to be the drug of choice for treatment. Secretary of Health and Human Services Tommy Thompson said he wanted a stockpile adequate to treat 10 million exposed persons. That meant he needed 1.2 billion Cipro pills (the treatment regimen is two pills for 60 days). Bayer, which holds the disputed patent rights to Cipro in the United States, could not meet that demand in a timely fashion.
For the drugs it was able to supply, Bayer was charging the government $1.89 per pill. The drugstore price was more than $4.50. Indian companies sell a generic version of the same drug for less than 20 cents.
In October, Senator Charles Schumer, D-New York, called on the administration to use its authority, under existing law, to issue compulsory licenses to generic companies to make Cipro for sale to the government.
"We cannot just rely on Bayer to ensure we have a sufficient supply of Cipro," Schumer said. "First, Bayer can only produce so much Cipro, and we should not put our best response to anthrax in the hands of just one manufacturer. Second, buying Cipro only from Bayer -- who charges a lot more than generic manufacturers would -- means we spend a lot more and receive a lot less. Hopefully, we won't even need to use the Cipro we already have on hand, but if we make arrangements to purchase it from multiple generic drug manufacturers, we'll have it if we need it."
Schumer's call for generic competition cast a spotlight on Bayer's monopoly control over Cipro -- controversial, in that generic companies had sued to challenge Bayer's patent, but dropped suit upon receiving payment from Bayer [see "Names in the News," this issue] -- and its resultant power to set prices and limit supply.
But the Bush administration chose not to exercise its authority to introduce generic competition.
With the spotlight shining on Bayer's price-gouging for Cipro, however, the Department of Health and Human Services (HHS) was forced into action. Against a backdrop that he might be forced to issue compulsory licenses if Bayer refused to drop the price, Secretary of HHS Tommy Thompson cut a deal with the company to lower Cipro prices, agreeing on a price tag of 95 cents a pill.
The Washington Post reported soon after that HHS pays Bayer 45 cents per Cipro pill for purchases under a separate government program.
Nonetheless, Thompson and Bayer congratulated each other on HHS's tough negotiating skills and Bayer's generosity.
"This agreement means that a much larger supply of this important pharmaceutical product will be available if needed," Thompson said. "The beneficial price also means that we can have more funds available to assist state and local health responders to be ready for all eventualities. I commend the Bayer Corporation for its ongoing efforts to ensure a fully adequate supply of this valuable product."
"Bayer is fully committed to supplying America in its war on bioterrorism," said Bayer president Helge Wehmeier. "This agreement between Bayer and the Department of Health and Human Services is an important security measure that will enable the nation to have in its stockpile ample supplies of Cipro to combat the threat of anthrax. Cipro has become standard for anthrax treatment. The men and women of Bayer are 100 percent committed to delivering this vital antibiotic to the U.S. government on schedule."
Activists campaigning to improve access to essential medicines had a …