Quote: "American consumers might become outraged to learn that while Cipro has cost nearly $350 a month in the United States, a generic drug from reputable suppliers costs only $10 a month in India."

October 17, 2001
U.S. Weighs the Hidden Cost of Its Pharmacy Bill
By DONALD G. McNEIL Jr.

PARIS, Oct. 16 — America's demand for Cipro, an antibiotic for treating anthrax, could raise serious questions for the United States government, and poor countries seeking cheaper drugs to treat their own epidemics of AIDS and other diseases will be looking closely at the way they are answered. Bayer, the German drug company that makes Cipro, said today that it was tripling production of the antibiotic in the face of growing public fears about anthrax. Bayer did not say how much of its increased production would come to the United States, and it was not clear exactly how much Cipro might be needed.

Although a government official said that doctors had assured him that patients exposed to anthrax can be treated with other antibiotics after an initial course of Cipro, it is not clear that the public will accept such assurances in what it perceives as a health emergency. Shortages of the Bayer drug Cipro — whether created by a genuine anthrax emergency or by panic buying — may convince Bush administration health officials that they want the generic drug, ciprofloxacin, which Bayer sells as Cipro, more than Bush administration trade officials want Bayer's patent protected.

American budget officials could also decide to buy cheaper generic drugs. Alternatively, American consumers might become outraged to learn that while Cipro has cost nearly $350 a month in the United States, a generic drug from reputable suppliers costs only $10 a month in India.

Senator Charles Schumer proposed today that the government buy generic versions for its emergency stockpile, noting that such a step would reduce dependence on a single supplier and could significantly reduce the costs of getting the amount of ciprofloxacin needed.

If the United States were to purchase large amounts of cheaper generic drugs it could open the floodgates for poor countries who want cheaper generic drugs for their epidemics of AIDS, malaria, tuberculosis and other diseases.

The pharmaceutical companies — often backed by Western governments — have long defended the patent system as the only one which allows them to protect their products and recover the high costs of developing drugs. But experts say that if the United States wants to purchase generic drugs to meet the sudden demand for ciprofloxacin, this presents no legal dilemma. American law is very clear: when the United States government needs a patented product, any official authorized to make purchases can ignore the patent and license someone else to make it.

"Any employee of the United States government can authorize a compulsory license for the product without even holding a hearing," said James P. Love, director of the Consumer Project on Technology, part of Ralph Nader's organization pushing for lower drug prices. "The company can't even sue to enjoin the government from doing it. All they can do is sue for compensation." That compensation, Mr. Love said, is based on eminent domain, the principle used when the government seizes land for a highway or military base. A judge picks an amount based on lost value, but not necessarily the highest price that could have been charged.

The government uses the law fairly frequently, Mr. Love said. In the 1960's, the government used the law to buy a drug, and the reason was simply that the patent holder charged too much. The United States Army wanted supplies of a tranquilizer, meprobamate, known by the brand name Miltown. Carter-Wallace, the American patent holder, sold it for $34.25 for 500 capsules, while a Danish supplier sold the same amount for $1.55 — a 20-fold difference. The United States bought it from Denmark and paid Carter-Wallace a modest royalty.

Bayer's American patents on its most common forms of ciprofloxacin expire on Dec. 9, 2003. More than 80 companies in India and elsewhere make generic versions, but only a few have been deemed to meet standards set by the Food and Drug Administration.

Five or six generic companies are already pre-qualified to sell Cipro when its patent expires, and getting supplies from them now is possible, according to William F. Haddad, an American generic drug manufacturer who helped write the 1984 Hatch- Waxman act that encouraged generic production. Depending on what a strain is resistant to, older drugs like penicillin, tetracycline and amoxicillin may work against anthrax.