Panic buying of CIPRO in response to recent threats of bio- terrorism involving Anthrax has caused massive shortages of this antibiotic. The ability to create new supplies is limited by the fact that the drug is patented until at least December 2003 and is only available from a single source. A challenge to the validity of the patent which might have resulted in the widespread availability of a low cost generic alternative was settled when the patent owner, Bayer Corporation, reportedly paid Barr Laboratories and others in excess of $200 million to drop the challenge. The FTC is investigating this settlement as a possible anti-trust violation and several class action antitrust cases have been commenced on behalf of consumers. At the present time at least five generic drug manufacturers have been tentatively approved to manufacture ciprofloxacin, the generic version of CIPRO but, due to the existence of the Bayer patent, they can not begin the commercial manufacture and sale of generic product until the Bayer patent expires more than 2 years from now.
October 13, 2001, "Increasing Access to CIPRO: A Strategy for Rapid Creation of a Government Stockpile," Al Engelberg memorandum to Senator Charles Schumer.

A U.S. senator Tuesday called on the government to increase the supply of the antibiotic Cipro, the only approved oral treatment for anthrax, by purchasing cheaper generic versions of the drug. Sen. Charles Schumer, a Democrat from New York, said U.S. law allows the government to make purchases from manufacturers other than the patent holder, in this case Bayer AG. "So if we invoke this statute, we can greatly increase our supply of Cipro and greatly reduce the cost to the government by about 50 percent," Schumer told a press conference.
October 16, 2001, Reuters, NY Senator urges U.S. to purchase generic Cipro

many bioweapons experts thought terrorists intent on mass murder rather than just mass panic would use an antibiotic-resistant strain. The Russians engineered anthrax strains resistant to penicillin, doxycycline and other antibiotics by splicing in genes from naturally resistant strains of, say, the common intestinal bacterium E. coli.
October 17, 2001, Anxious About Anthrax, Sharon Begley and Michael Isikoff.

We were shocked by your comments in the October 17, 2001 Washington Post, indicating that you do not have the legal authority to authorize generic production of ciprofloxacin . . . This, of course, is not true. As your own staff is well aware, you may use 28 USC 1498 to issue compulsory licenses for patents, and you could immediately authorize the five companies who have already satisfied US FDA requirements for the quality of their products to speed the manufacturer of ciprofloxacin, and indeed this could and should be done for any other medicine needed to confront the current crisis. By failing to act, you are putting Americans at risk. By acting to authorize generic competitors to manufacture ciprofloxacin, you would reduce public anxiety over the supply of the drug, and take steps to introduce competition which would ensure redundant capacity and a more favorable procurement environment.
October 18, 2001, Letter from Ralph Nader and James Love to DHHS Secretary Tommy Thompson

Canada, taking an unusual step that the United States has resisted, said yesterday that it had overridden Bayer's patent for Cipro, an antibiotic to treat anthrax, and ordered a million tablets of a generic version from a Canadian company. "These are extraordinary and unusual times," said Paige Raymond Kovach, a spokeswoman for Health Canada. "Canadians expect and demand that their government will take all steps necessary to protect their health and safety."
October 19, 2001, "Canada Overrides Patent for CIPRO to Treat Anthrax," Amy Harmon and Robert Pear in the New York Times.

. . . a number of public relations consultants say Bayer has bungled its communications. "They have a once-in-a-lifetime opportunity to establish themselves as a friend of the United States, but instead they come across as a group of German bookkeepers," said Stephan Richter.
October 20, 2001, "The Drug Maker:Uncertainty in Approach Toward Cipro," Edmund Andrews in the New York Times.

the surgeon general, Dr. David Satcher, said in a White House briefing on Friday that a typical course of treatment against anthrax is to start with Cipro, determine if the anthrax strain is resistant to penicillin and doxycyline, then switch if indicated to the other drugs.
October 21, 2001, "Public Health or Public Relations," Elisabeth Bumiller in the New York Times.

Health and Human Services Secretary Tommy Thompson said Tuesday that he is prepared to go to Congress to seek a generic version of an antibiotic used to treat anthrax infection if the manufacturer does not lower its price. "The price is the question, not the supply," he told a congressional hearing.
October 23, 2001, "Thompson: Cipro Price Must Be Lower," Associated Press.

Mr. Gardett, the spokesman for the Department of Health and Human Services, countered that Mr. Thompson has not actually infringed on any patents, and added that the secretary has said he wants to avoid that step. "He has only talked about it," Mr. Gardett said.
October 24, 2001, "U.S. seeks cheaper Cipro stockpile," Carter Dougherty in The Washington Times.

Secretary Thompson said current supplies of Cipro and other antibiotics which are effective against anthrax "are entirely adequate to meet the current need. This purchase is aimed at expanding our emergency stand-by capacity, to make us even better prepared for the possibility of massive exposure to anthrax or other biological agents. . . It's important to remember that other antibiotics maintained as part of the national emergency reserve have been found to work against the strains of anthrax that have been used in the attacks in Florida, New York, New Jersey and Washington, D.C.," Secretary Thompson said
October 24, 2001, "HHS, Bayer Agree to CIPRO Purchase," HHS press release.

So why not let the generic firms do it? It's not clear that letting generic companies produce a one-time emergency stockpile of the drug would hurt Bayer's patent. Batito was clear that Apotex wouldn't sell the drug again in Canada after filling the government's order until legally allowed to do so. . . Bayer is running its factories at high capacity to meet the demand, while the generic companies are idling their factories waiting for its patent to expire. Surely, some equitable deal could have been worked out between Bayer, the generic companies and the U.S. government that wouldn't have hurt Cipro sales for the year-and-a-half or so the drug has left.
October 24, 2001, "Should Bayer Cut Prices To Protect A Patent? ," Matthew Herper in Forbes.com.

Secretary Thompson says we need medications for 10 million persons. At the 120 pill recommended course of treatment for ciprofloxacin, this is 1.2 billion pills. Bayer says it can produce 2 million per day. At this rate it would take 600 days to supply 1.2 billion pills. The US is now saying it will only provide 10 doses of ciprofloxacin, and then switch to a cheaper antibiotic. The rationale for switching is not clear, particularly if we face an attack with a disease resistant strain. . . . The US is cutting corners on public health to protect its negotiating position in the Doha WTO meeting on November 9-13, where the issue of compulsory licensing of drugs, and imports under a compulsory license where a country does not have domestic capacity for production, is a central issue, with the US, Canada and the EU opposing the Africa group.
October 24, 2001. "Talkings Points on Cipro Patent dispute," James Love.

Congressional Republicans have traditionally been leery of interfering with patents. But Representative Christopher Shays, the Connecticut Republican who is the chairman of the House Government Reform subcommittee that held today's hearing, said that Congress would probably back any request from Mr. Thompson for permission to bypass the patent. "If the secretary asked for it, it would probably pass," he said.
Octobedr 24, 2001, "U.S. Says Bayer Will Cut Cost of Its Anthrax Drug," Keith Bradsher and Edmund L. Andrews in the New York Times

"It's a very interesting parallel" to the position taken by the U.S. in urging South Africa not to override patents of U.S. drug companies and make generic versions of AIDS drugs available to patients in that country, said Nancy Bradish Myers, senior political analyst at Lehman Brothers.
October 25, 2001, "Bayer to Slash by Nearly half rice U.S. Pays for Anthrax Drug," Jill Carroll and Ron Winslow in the WSJ.

Henry McKinnell, chairman and chief executive of pharmaceutical company Pfizer Inc., called the federal government's negotiations on the price of drugs such as Cipro "completely legitimate" and defended the "abrogation of patents" in the time of a true national emergency. But, he said, there is no national emergency as far as drug supplies are concerned and therefore no need to break patent protection for any drugs.
October 25, 2001, "Bayer to Slash by Nearly half rice U.S. Pays for Anthrax Drug," Jill Carroll and Ron Winslow in the WSJ.

A compulsory license for Cipro was not in the cards in the US, and it was a temporary bizarre and controversial policy deviation in Canada, to the resulting embarrassment of the Health Minister. It could not have stood any political challenge in Canada or the US and it did not.
October 25, 2001, letter from Harvey Bale, chief of the International Federation of Pharmaceutical Manufacturers Associations (IFPMA) to the UK Commision on Intellectual Property Rights

"This episode with Cipro opens a door that wasn't opened before," said Al Engelberg, a patent lawyer and informal adviser to Sen. Charles Schumer (D-N.Y.), who last week called for the U.S. government to override Bayer's Cipro patent. "It demonstrates that this government is concerned about the price of drugs."
October 25, 2001, "A battered Bayer opts out of a fight over its Cipro patent," Ed Silverman in the Star-Ledger.

Agnes Varis, president of Agvar Chemicals, a pharmaceutical trading company in Little Falls, N.J., said ciprofloxacin costs 12.5 cents to 20 cents a tablet in global markets. . . . The raw material can probably be manufactured by the ton by Bayer's own factories for 5 cents or less a tablet, she said.
October 26, 2001, "Bayer Halves Price for Cipro, but Rivals Offer Drugs Free," Keith Bradsher in the New York Times.

Kenneth F. Bastow, associate professor of pharmacy at the University of North Carolina, said Cipro and similar medicines like Tequin and Levaquin were most likely to be effective against any strain of anthrax. "Of all the strains of anthrax that are known, and there are lots, resistance to Cipro has never been documented, while resistance to some of these others has been," he said.
October 26, 2001, "Bayer Halves Price for Cipro, but Rivals Offer Drugs Free," Keith Bradsher in the New York Times.

With the Bayer deal, the nation will have 120 million Cipro pills in government stockpiles by the end of the year. Mr. Thompson said this is enough for 12 million Americans, but this is true only if each person takes the medicine for only five days. If doses were ever needed for 60 days, or 120 tablets a person, then the stockpile would be adequate for only a million people.
October 26, 2001, "Bayer Halves Price for Cipro, but Rivals Offer Drugs Free," Keith Bradsher in the New York Times.

People need to know that there are drugs other than Cipro, that the supply will not be a problem and that these drugs will be available to the government at a reasonable price," said Henry A. McKinnell, chairman of Pfizer. "We don't intend to make a profit on this threat to the nation."
October 26, 2001, "Bayer Halves Price for Cipro, but Rivals Offer Drugs Free," Keith Bradsher in the New York Times.

Cipro is being sold by Bayer for about 43 cents a tablet under an HHS program, known as "340B," in which the agency negotiates low prices on pharmaceuticals for hospitals and clinics that treat poor people and underserved areas. An internal document from the government health agency, obtained by The Washington Post, acknowledged that "the price differential is so great between 340B and the price the Secretary [Tommy G. Thompson] negotiated" with Bayer this week, and cautioned that the disparate prices should not be made public "given the sensitivity to divulging pricing information."
October 26, 2001, "HHS's Varying Costs for Cipro Criticized: U.S. to Pay 95 Cents a Pill Under One Program and 43 Cents Under Another," Shankar Vedantam in the Washington Post.

Rep. Henry A. Waxman (Calif.), ranking Democrat on the Government Reform Committee, said, "The disparities in Cipro pricing show that drug prices have become so complicated that even the largest purchasers are groping in the dark to try to figure out what is a fair price and what is unreasonable."
October 26, 2001, "HHS's Varying Costs for Cipro Criticized: U.S. to Pay 95 Cents a Pill Under One Program and 43 Cents Under Another," Shankar Vedantam in the Washington Post.