[e-drug] WSJ on USG/Bayer deal

[E-drug <e-drug@usa.healthnet.org>]

E-drug: WSJ on USG/Bayer deal
-------------------------------------------------------------------------

[Copied as fair use. HH]

The Wall Street Journal, October 25, 2001 

Bayer to Slash by Nearly Half Price U.S. Pays for Anthrax Drug
By Jill Carroll and Ron Winslow 

After the near collapse of a deal between the government and
Bayer AG on the price of its antianthrax drug Cipro, an agreement
was finally reached to nearly halve the price that the government
pays for the drug.

Bayer, a German pharmaceutical maker, agreed to sell the
Department of Health and Human Services 100 million Cipro pills at
95 cents a pill. The government had been buying the pills for about
$1.77. The deal guarantees the government enough Cipro by
January to treat 12 million people, 10 million more than supplies
can treat now.

The agreement comes after a high-stakes threat by Tommy
Thompson, HHS secretary, to break Bayer's patent for Cipro if he
didn't get the price he wanted. Some analysts and observers
believe Mr. Thompson's tactics -- even if a negotiating ploy --
amounted to a departure from the government's long-standing
support of drug-company patent rights in disputes over prices. The
U.S. government's steadfast demand that even poor African
countries in need of AIDS treatments abide by drug patents has
created a public furor in recent years.

"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.

"If the federal government is going to threaten to break valuable
patent rights at the first sign of a crisis," she said, "it will likely
serve as a significant deterrent to other drug companies who would
like to do the 'right thing' and use their R&D capabilities to help the
government fight bioterrorism."

Nicholas Edwards, a partner in the London office of consultant
Accenture, which works with the pharmaceutical industry, said, "If
we are putting pressure on other countries to respect intellectual
property, we Western governments need to make sure we are
respecting intellectual property."

The pharmaceutical industry took a measured view of the issue
Wednesday. "We think the secretary's remarks reflect his concerns
in unusual circumstances and do not set a precedent about law or
policy," said a spokesman for the Pharmaceutical Research and
Manufacturers of America, the industry's big trade group based in
Washington. "We shouldn't be quick to draw erroneous conclusions
as underscored by the government of Canada's recent flip-flop on
compulsory licensing." Canada on Monday retreated from an earlier
decision to nullify Bayer's patent in that country.

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.

Helge H. Wehmeier, president and chief executive officer of Bayer
Corp., the U.S. unit of Bayer AG, said he considered the threat to
the Cipro patent only "a remote possibility" because the company
was determined to strike an agreement. He said people who have
been exposed to anthrax and are taking Cipro "know that it works.
We needed to rise to the need to give Americans the safety blanket
they require."

He said an agreement in principle was worked out Monday,
including the price, with a "handshake" in 10 minutes. But that was
followed by more detailed negotiations that "really were tough."

Bayer, U.S. Government Near Agreement for Lower Price on
Anthrax Drug Cipro (Oct. 24)
 
By late Wednesday morning, the tentative agreement had fallen
through. Mr. Thomson later explained that it was a wording
dispute. When he returned from a speech to the Conference of
Mayors, "we both cooled down a bit," he said. "You never have a
good deal until both people get mad and walk away."

The Cipro the government purchased will be used to beef up the
National Pharmaceutical Stockpile and added to special packs of
emergency supplies that can be sent anywhere in the country in 12
hours. Consumer advocates said the deal was a step in the right
direction, but that Mr. Thompson needs to do more to make sure
the supply of anthrax treatments is adequate. "He's making some
progress, but he's not quite there yet," said Jamie Love, a
consumer advocate who supports letting makers of generic drugs
sell Cipro. "He's cutting corners with public health to protect the
drug companies."

But the deal managed to quiet one of Mr. Thompson's strongest
critics on the issue, Sen. Charles Schumer (D-N.Y.), who argued
that the government already has the authority to buy generic
versions of Cipro despite Bayer's patent and should do so. Mr.
Schumer praised the deal for saving taxpayer money and hoped
"Bayer will consider extending the same kind of civic mindedness to
the private consumer." The average wholesale price for Cipro is
$4.67.

Under the agreement, the government can buy a second batch of
100 million pills at 85 cents a pill and a third batch for 75 cents a
pill. The money for the Cipro is coming out of $1.6 billion in
emergency money the president requested last week. Bayer said it
is also donating two million tablets for the government to give to
people who may be exposed while investigating possible anthrax
outbreaks and another two million for postal workers who may have
been exposed to anthrax-laden envelopes.

The government is also buying other antibiotics like doxycycline
that have been effective against the anthrax cases so far with
fewer side effects. Officials are trying to encourage their use.

-- Yochi J. Dreazen, Scott Hensley and Gardiner Harris contributed
to this article.


--
Send mail for the `E-Drug' conference to `e-drug@usa.healthnet.org'.
Information and archive http://satellife.healthnet.org/programs/edrug.html
Mail administrative requests to `majordomo@usa.healthnet.org'.
For additional assistance, send mail to:  `owner-e-drug@usa.healthnet.org'.