NOVEMBER 12, 2001


While the Bush administration claimed to negotiate a tough deal for a government stockpile of Cipro, a drug industry lobbying campaign has pushed Congress to quietly pass legislation that will give a six-month monopoly patent extension to Cipro and more than 100 other drugs, according to a new Public Citizen study. The patent extension legislation, which passed the Senate on Oct. 18 and will be voted on by the House of Representatives as early Monday, Nov. 12, is based on this premise: If drug companies test their products for safety in children, they should receive a six-month patent extension.

The costs of the safety and efficacy tests sought by pediatricians, children's advocates and the U.S. Food and Drug Administration (FDA) is estimated at $727 million, according to Public Citizen's report, Patently Offensive. The reward, in terms of added sales, to patent- holding drug companies is $29.6 billion, according to the FDA -- a return 40 times the industry's projected investment in pediatric tests. Cipro's maker, Bayer, would garner an extra $358 million in sales due to the anthrax-fighting drug's patent extension, according to the report.

"The drug industry has put on a cynical PR front about its patriotic efforts to fight bioterrorism," said Frank Clemente, director of Public Citizen's Congress Watch. "Meanwhile, it has refused to sacrifice a penny -- not even for children's health -- in its uncontrolled drive for monopoly patent extensions and sky-high profits." Public Citizen believes that pediatric tests should be required as part of the FDA's drug approval process with no special financial incentive. The federal government doesn't give drug companies monopoly patent extensions to test their products in other consumer populations such as women or African-Americans.

Public Citizen's report found that Bayer, the exclusive manufacturer of Cipro, lobbied for the patent-extension legislation and spent $3.7 million on campaign contributions and lobbying since 1999. A six-month patent extension for Cipro would pay for all of Bayer's contributions and lobbying since 1999 in just two days. So-called "children's groups" have played a crucial role in helping to pass the patent extension legislation. The Coalition for Children's Health, which touts itself as the "leading coalition in Washington on children's health policy," is financially supported by the drug industry, chaired by a former drug industry lobbyist, and composed of several groups financially supported by the drug industry.

10/29/2001 - USA Today

Cipro saga exposes how drugmakers protect profits

With the anthrax attacks rocketing demand for the antibiotic Cipro, its sole certified supplier, Bayer, agreed last week to sell 100 million doses of the drug to the federal government at a hefty 46% discount. That's good news for the government, which will save $82 million on the Cipro emergency stockpiles it holds to treat anthrax.
But the deal's not as good for the public, whose Cipro supplies weren't part of the negotiated discount. And it raises troubling questions about whether any discount would have been necessary if Bayer hadn't paid off a potential competitor years ago to keep it from introducing a cheaper generic version of the drug.
In 1997, Bayer persuaded generic-drug maker Barr Laboratories to drop a legal challenge to Bayer's patent on Cipro by agreeing to pay Barr about $28 million a year until the patent expires in 2003.
To most people, that sounds suspiciously like a payoff to avoid competition, especially considering that drug prices typically drop 25% the first year a brand-name prescription gains generic competitors. And, indeed, the Federal Trade Commission (FTC) is looking at the 1997 deal to determine whether it violates antitrust laws.
Legal or not, the practice is relatively common. In fact, it's just one of many that drug companies use to prolong the lucrative patent protection afforded brand-name drugs.
In most cases, that means consumers end up paying far more for brand-name drugs far longer than the patent laws ever intended. With roughly $20 billion worth of prescription drugs closing in on the end of their normal patent lives, the potential costs are enormous.
As the Cipro example shows, the practices also can have potential public health implications at a time of national crisis. Until Oct. 18, Cipro was the only drug federally approved to treat deadly inhalation anthrax, which meant that the public had been dependent on a single supplier for treatment.

Patent abuses
Patents aren't supposed to work this way. In fact, they're designed as a means to encourage innovation. In exchange for substantial investment costs, companies are guaranteed a monopoly on that innovation for a fixed amount of time.
But drug companies have perverted the patent system in an effort to prolong the guaranteed profits from their monopoly drugs.
In 1998, for example, Abbott Laboratories paid generic maker Geneva Pharmaceuticals $4.5 million a month to drop its patent challenge to a hypertension drug. All Geneva had to do was agree not to compete. Geneva held to the bargain, despite favorable court rulings on its challenge. The cost to consumers from lost competition was $100 million a year. After the FTC filed a complaint about the arrangement, the companies finally agreed to abandon it.
That's just one of several tricks used to keep low-cost generics off the market.

Among the others:
• "Citizen petitions." Under the law, anyone has the right to challenge generic competition for a drug, but such petitions are often submitted not by the public but by the patent-holding drug firms themselves. Filed just before a patent is due to expire, the petition triggers a Food and Drug Administration (FDA) review. The petitions almost never succeed, but until the review is finished, generics can't come in and compete.
• Last-minute patents. Another trick is for the drug company to file an entirely new patent on a drug just before a generic is about to be approved. Under law, that triggers a 30-month delay, while disputes over the new patent are settled. Bristol-Myers Squibb, for instance, won a new patent on its antidepressant BuSpar in 2000, the day before generics were to start shipping, claiming control over an ingredient created as the drug is digested.
• Lobbying. When all else fails, drug firms have tried, usually unsuccessfully, to convince lawmakers to grant patent extensions. Schering-Plough has been trying for years to get Congress to approve an extension on its big-selling allergy drug, Claritin.

A new effort
If those weren't enough, a new tactic is being tested. Under current law, a drugmaker gets a half-year patent extension for testing an existing drug on children. Another law gives drugmakers 3 years of exclusive rights for FDA-approved label changes. According to generic makers, Bristol-Myers is trying to combine the two by changing the label on its diabetes drug Glucophage to reflect pediatric study results. If successful, it would pave the way for an easy 3 1/2 years of extra monopoly profits.
Drug-industry-patent abuses have become so pervasive that the FTC has embarked on a broad investigation of them. Even lawmakers are taking notice: Congress has at least two bills that would rein in some of the worst abuses; the Senate passed its bill earlier this month.
Trying to squeeze out extra profits is not a surprising business tactic. Doing so by abusing the patent system, however, is an affront to consumers who pay the higher bills, and to the public, which could suffer the consequences in a public health crisis.