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KEYCODE BAYER #46

October 2001

BAYER, ANTHRAX AND CIPRO - SELECTED INFORMATION

Gilman and Pastor, LLP, is prosecuting a nationwide class action on behalf of all persons or entities in the United States who purchased and/or paid for Cipro at any time since January 8, 1997. Cipro is a brand-name for the prescription drug ciprofloxacin hydrochloride, an antibiotic approved to treat various sinus, respiratory, urinary and skin infections.

"We allege that beginning on January 8, 1997, Bayer AG entered into unlawful and anti-competitive agreements with Barr Laboratories, Inc. and Hoechst Marion Roussel, Inc. under which, in exchange for over $50 million per year, Barr and Hoechst Marion Roussel agreed not to manufacture or market a generic version of Cipro. These agreements allowed Bayer to maintain a monopoly over the ciprofloxacin market as well as to fix and maintain supra-competitive process for Cipro. As a result of the unlawful agreements, Plaintiffs and the Class have been deprived of the ability to purchase generic ciprofloxacin at a competitive price.

Selected Prices for 500 mg tabs of Ciprofloxacin (US$)
Price per pill (Revised October 21, 2001)

USA Bayer wholesale 4.67
USA Bayer best federal government 1.83
Canada Bayer/government 1.58
Canada Apotext/government .95
NZ Bayer/retail 1.29
South Africa/government 2.10
India generic 1.6 Rs = .03
Poland Bayer 1.51
Poland Polfa Grodzisk generic .29

Letter from Ralph Nader, James Love to Secretary Thompson Regarding Ciprofloxacin

Dear Secretary Thompson:
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, a drug used to treat victims of an anthrax attack. 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 U.S. 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. (.)

Bayer, the giant German pharmaceutical firm, currently markets ciprofloxacin on an exclusive basis in the United States. Drug stores are charging in some cases more than $700 for a two month's supply of medicine that can be obtained for as little as $20 in some foreign county generic markets, and now it seeks to be the exclusive company that can supply 1.2 billion pills to the federal government. Bayer stands to make hundreds of millions if not billions of dollars in the wake of the September 11 terrorist attack on Americans.

In the absence of adequate government stockpiles, families who cannot afford the hundreds of dollars per month per family member for ciprofloxacin risk not having access to this product, should the need arise. This is an unethical and unnecessary form of rationing. Some government officials and those who can afford the high prices have secure supplies of ciprofloxacin. It is your duty to see that all taxpayers and especially those who are less affluent are protected, and are protected as soon as is possible, not as soon as it is possible for one firm, Bayer, to supply the market. And it would make sense to have redundant sources of supply, for all of the obvious reasons.

More generally, you need to be forward looking, should other cases arise with similar constraints on the access to medicines, and you need to find ways to obtain whatever medicines may be needed. You need to provide a framework for acquisition of needed medicines, including the steps that will be taken to address issues of pricing and affordability. (.)

Your official responsibility is to protect the public's health, and not to defend large profiteering pharmaceutical companies, which are already making a fortune because of our country's current problems. How do you define the patriotic choice here?

Sincerely,
Ralph Nader, James Love

10/22/2001, The San Francisco Chronicle

SUPPOSE THERE was a magic-bullet drug that could knock out a looming fatal disease. Would it make sense to let pharmaceutical firms crank out millions of extra pills, or stick with the one licensed manufacturer to rev up the supply line? This is the choice facing Washington with the patented Cipro, an antibiotic that can quell anthrax.

Washington should be devising an insurance policy against disaster, but instead we're getting foot-dragging. The reason is clear. Cipro is a drug licensed by Bayer, which has refused to allow rivals to sell generic knockoffs. Bayer promises to step up production threefold, but it wants to keep control, saying any change in the rules would undercut the rewards of developing new drugs.

The Bush administration says it has pushed Bayer for extra Cipro supplies, but has refused to override patent laws, which it could arguably do. That's a shortsighted, even dangerous, approach. Canada, with no cases of anthrax, has authorized a generic drug maker to make a Cipro copy. It's a responsible move that should quell public anxiety and prepare for trouble.
Washington's hesitancy has other sources. If drug licensing laws are suspended for Cipro, what about big-ticket AIDS drugs? Countries such as Brazil, South Africa and India are challenging American drugmakers, either in court or by open defiance, to permit cheaper copycat drugs. Allowing Cipro generics may embolden these challenges and prompt other groups to protest high drug prices.

But Washington has bigger worries. It must calm a climate of fear, worsened partly by muddled official reactions, including the House's hasty adjournment after an anthrax scare. Capitol Hill became a ghost town, a specter that sends a message of weakness and fright.
Our leaders need to set an example of tough-mindedness out of Washington. That means staying on the job and standing up to the powerful drug industry.

Pittsburgh City Paper, 2001

What is the Bayer truth about Cipro?

When NBC anchor Tom Brokaw concluded a news broadcast with the declaration, "In Cipro We Trust," he gave the antibiotic and its maker, Pittsburgh-based Bayer Corporation, the kind of celebrity money can't buy … and the kind of headaches even a drug company might struggle to recover from. As the Robinson Township firm acknowledged in a recent full-page newspaper ad: "Almost overnight, Cipro … has become one of the most recognized antibiotics in the world."
But the Cipro story has a darker side, which has attracted little attention in the city that Bayer calls home. Many of those who have taken the drug have complained of severe side effects. And although Bayer has donated millions of Cipro pills to emergency workers and post office employees, questions linger about how much the company is profiting from the anthrax crisis.

Almost as quickly as the anthrax threat materialized, so did its cure: Cipro, the commercial name for ciprofloxacin. Already a best-selling broad-based antibiotic, it quickly became the panacea for a country suddenly afraid of its own mail.
At first, the only question about Cipro was whether Bayer could make enough of it. But in October, Bayer pledged to furnish the federal government with at least 100 million pills. "This is not the first time Bayer has responded quickly to a national emergency," company ads boasted, citing the Cipro given to soldiers during the Gulf War. "Bayer has been there in the past … and will be there in the event of future need."
But by this time, postal workers and employees at American Media, the Florida-based tabloid publisher that was first hit with anthrax, were already complaining of severe side effects from Cipro. Among the complaints: stomach pains, migraines, fever and dizziness. At least one postal worker was hospitalized after potentially lethal reaction to the drug. Many of these first Cipro recipients have switched to doxycycline.
Cipro is a "fluoroquinolone," a group of powerful antibiotics whose side effects can include symptoms like ruptured Achilles' tendons, psychotic episodes, and even death. And on a Web site for people who've suffered severe quinolone side effects (www.geocities.com/quinolones), some postings express considerable anger about Cipro: "'In Cipro We Trust,' said Tom Brokaw," reads a posting from a mother who claims her son required extensive therapy after taking Cipro. "How little he knows. How little the majority of people know about this destroyer of lives." Indeed, one researcher told the Wall Street Journal, "If people knew the risk of seizures and major psychosis, I don't think they would take Cipro. I wouldn't."
Philadelphia-based investigative reporter Stephen Fried has seen such symptoms firsthand. In 1992, his wife took a quinolone (not Cipro) for a urinary tract infection "so minor she didn't know she had it." After taking a single pill, she began shaking uncontrollably and couldn't complete sentences. She was hospitalized within hours and suffers from bipolar disorder today. The experience led Fried to write Bitter Pills, a book about the dangers of antibiotics.
"A certain percentage of people will be made temporarily psychotic by this pill," he says of Cipro. "You are going to have some adverse reactions." And days after Bayer's Cipro deal was struck, the government announced Cipro was no longer its drug of first choice: An older drug, doxycycline, was being recommended instead because it was cheaper and had fewer side effects.
Bayer executives emphasize that Cipro has undergone hundreds of drug trials, and that Cipro has been prescribed 300 million times. While 7 percent or 8 percent of those who take Cipro have an adverse reaction, doctors say, less than 2 percent will suffer effects to the central nervous system. The drug was, in fact, just approved for pregnant women.
Moreover, says Dr. Paul McCarthy, Bayer's vice-president for U.S. medical science, "When you are looking at a threat like anthrax, your tolerance for risk is going to be higher." Thanks to its use in the Gulf War, Cipro was the only anthrax treatment approved by the government when the terror attacks began, and it is among the most powerful antibiotics on the market.
Even familiar drugs like penicillin are effective against the anthrax strains discovered so far. But no one knew that at first, and anthrax can be bred to resist certain antibiotics. By the time a doctor figures out which antibiotic works, it may be too late, McCarthy says: "If the spores start releasing their toxins, and you give the right antibodies late, it may not be in time."
But while Fried agrees that it makes sense to use Cipro on those infected with anthrax, the drug was handed out as a precautionary measure to thousands of people whether they were infected or not. Doxycycline, he says, "is as effective against anthrax, without some of the attendant risks." For many who took Cipro, the cure could be worse than the disease -- especially if they never had the disease at all.
Fried says a lack of government restraint has made things worse. "The government has done a bad job of communicating about drug side effects," Fried says, and one reason is that, nearly a year into its tenure, the Bush administration hasn't appointed a new head of the Food and Drug Administration. As a result, "This is a time of unprecedented antibiotic use, and we're going by the seat of our pants."
For their part, Bayer execs have warned the public not to hoard Cipro or use it without a prescription: During a Nov. 2 appearance on the Today show, for example, Bayer CEO Helge Wehmeier warned that Cipro "is not cough medicine. … It's serious stuff." And Cipro's drug information does warn of side effects.
Still, Fried says, "The public doesn't know how to read those warnings." It does recognize a brand name, though, especially one with so much publicity: "People are saying, 'All my friends are taking it; it's stronger, it's more expensive, I want Cipro.'"

Thanks to a deal reached in October with the federal Department of Health and Human Services, Bayer is offering Cipro at a deep discount. Bayer will sell 100 million pills at 95 cents each, half the government's usual price of $1.83 a tablet, and a fraction of Cipro's usual retail cost of around $4. (Should the government need additional capsules, the price for the next 100 million pills will drop to 85 cents, and then to 75 cents after that.) Bayer execs boast that the contract was negotiated in less than a day.
Perhaps the government should have moved more slowly: On Oct. 26, the Washington Post reported that the government was already getting Cipro for a mere 43 cents a tablet under another program. The Post obtained an internal government memo asserting "the price differential is so great" that it should not be made public "given the sensitivity to divulging pricing information."
Bayer spokesman Robert Kloppenburg says the 43-cent rate was an "aberration," and federal officials have said the $1.83 rate is the norm. But the company will not disclose how much profit it earns on Cipro: "Our competitors would be even more interested in that than you," Kloppenburg says. And the dual pricing has raised charges that Bayer is profiting handsomely from the anthrax scare.
"This is a classic example of how consumers lose in the long run and manufacturers win out," says Dierdre Cummings, the health care advocate for the Massachusetts Public Interest Research Group, a consumer advocacy organization. Drug prices, she says, are a key reason that health care costs are spiraling. Since drugs can be patented, the companies who develop them have a monopoly on the product, which Cummings calls "a surefire way to make sure they can charge whatever they want."
The answer, say advocates, is to override Bayer's patent and let generic manufacturers produce the drug. National press reports have quoted generic Cipro prices as low as a dime per capsule: Carol Cox, a spokeswoman for generic drug manufacturer Barr Laboratories, acknowledges, "We could sell Cipro for significantly under a dollar and still make a profit" of 50 or 60 percent.
But although Barr challenged the validity of Bayer's Cipro patent in 1992 -- the first step to producing a generic version of the drug -- Barr doesn't make the drug. In fact, Bayer pays the company $25 million a year not to try.
To make a generic version of Cipro, Barr would have to show in court that Bayer's patent was invalid for one of several reasons. But in 1997 the companies reached a settlement in which Bayer either pays Barr $25 million a year or allows Barr to sell Cipro under license. So far, Bayer has paid the money, buying the right to set its own price for the drug. But $25 million is a drop in the bucket: The Cipro patent, which doesn't expire until 2003, has generated $1 billion in American sales, according to legal documents and newspaper reports.
More than a dozen consumer groups are suing to overturn that agreement. "The case is a basic price-fixing anti-trust case," says Cummings. The $25 million yearly payment "just smells bad," says Kim Shellenberger, an attorney representing the plaintiffs.
Cox insists that Barr is not being paid off: Patent documents Barr obtained during litigation convinced the company "we were not going to win" a patent challenge anyway. But a preliminary ruling by a New York federal judge in October held that the allegations "are hardly implausible." Citing a legal standard upheld in another case, the judge ruled, "payments like those made by Bayer … may 'suggest strongly the anticompetitive intent of the parties.'"
Still, even industry skeptic Stephen Fried does not begrudge Bayer's earnings: "It can cost millions to make new drugs." And arguably corporate profits are why we have Cipro in the first place. McCarthy estimates that it costs $500 million to develop a new drug, and, "If there wasn't that incentive to develop new drugs, we might not have a lot of them today. Including Cipro."
Generic companies don't do that research, Kloppenburg points out: "Most generic companies have more lawyers on staff than doctors." Anyway, he adds, "No one expects Lockheed to make a military jet for half-price" even though jets are necessary for defense as well.
But defense contracts -- notorious for their $600 hammers -- might not be the most admirable example to cite. And Kloppenburg acknowledges that drug companies have been highly profitable even with their R&D costs.
"The pharmaceutical industry has remained one of the top-netting industries for the past 20 years," says Cummings. So when it comes to lowering prices, "There's a lot of room to work in."

writer: CHRIS POTTER