The Cipro Rip Off

by Russell Mokhiber And Robert Weissman

Confronted with the prospect of bioterrorism on a massive scale, the Bush administration and the pharmaceutical industry have colluded to protect patent monopolies rather than the public health.

When the anthrax scare first hit, Cipro was understood to be the drug of choice for treatment. Secretary of Health and Human Services Tommy Thompson said he wanted a stockpile adequate to treat 10 million exposed persons. That meant he needed 1.2 billion Cipro pills (the treatment regimen is two pills for 60 days). Bayer, which holds the disputed patent rights to Cipro in the United States, could not meet that demand in a timely fashion.

For the drugs it was able to supply, Bayer was charging the government $1.89 per pill. The drugstore price was more than $4.50. Indian companies sell a generic version of the same drug for less than 20 cents.

The U.S. government has authority, under existing law, to license generic companies to make on-patent drugs for sale to the government. Those companies could have met supply needs that Bayer was not and is not able to satisfy. Generic competition might also have helped bring prices down, though it is unclear exactly what the government would have to pay Bayer if it bought generic versions of Cipro.

But the Bush administration chose not to exercise this authority. Pharmaceutical industry monopolistic patent protections are so sacrosanct, the administration decided, that even urgent U.S. public health needs do not merit any limitation on patent monopolies.

The administration was motivated in significant part by fear that if it authorized generic production in the United States for Cipro, it would undermine its hand in negotiations at the World Trade Organization (WTO) meeting in Qatar. There, African and other poor countries are asking for a declaration that the WTO’s intellectual property rules not be interpreted in ways that undermine efforts to advance public health. Above all, they want to clarify their existing right under WTO rules to authorize generic production of on-patent drugs (a practice known as compulsory licensing). The United States, pathetically, is opposing this effort.

With the spotlight shining on Bayer’s price-gouging for Cipro, the Department of Health and Human Services had to take action. It cut a deal with the company to lower Cipro prices, agreeing on a price tag of 95 cents a pill. That supposedly cut-rate price turns out to be twice what the same government, indeed the same government agency, pays the same company for the same drug under another program.

But though inadequate, the price reduction did reflect the U.S. government’s negotiating leverage — leverage that was enhanced by the fact that the government had the authority to turn to generic manufacturers if Bayer refused to cut a deal.

What hypocrisy! At the same time as it leveraged the threat of a compulsory license, the administration is working feverishly in diverse fora — including the WTO and the Free Trade Area of the Americas negotiations — to limit poor countries’ effective ability to do compulsory licensing.

It is time to reverse course, and for citizens to demand the government prioritize public health over corporate profit.

In the United States, it is unclear how much Cipro the government should stockpile as a public health measure. Other, off-patent antibiotics may be superior and are cheaper. These other drugs may or may not be effective against all strains of anthrax. What is clear is that intellectual property issues should have no impact on public health judgments made in this context.

Representative Sherrod Brown has introduced legislation, H.R. 3235, the Public Health Emergency Medicines Act, that would reiterate the government’s ability to do compulsory licensing in case of public health emergency (the government currently has this right, without regard to situation of national emergency) and establish that compensation paid to patent holders should be “reasonable.” It lists a variety of criteria to determine reasonability, including how much the patent holder invested and risked in the drug’s development, and how significant the government contribution was to the drug’s research and development. It also would permit the government to authorize generic producers to manufacture on-patent drugs in the United States for export to countries undergoing public health emergencies. The Public Health Emergency Medicines Act should quickly become law.

In international treaty negotiations, it is time for the United States to stop identifying its interests only with those of the brand-name drug manufacturers. The government should immediately cease its shameful opposition to a declaration that the WTO intellectual property agreement should not hinder developing country measures to protect public health. It should agree to accept the few needed clarifications to WTO rules to make compulsory licensing workable in poor countries over the long haul. It should end its sneaky efforts in the Free Trade Area of the Americas and other negotiations to impose technical rules that would impede compulsory licensing. And Congress should deny the administration the fast-track authority it seeks to facilitate negotiation of more trade rules enhancing the brand-name drug companies’ monopoly power.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor. They are co-authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage Press, 1999).

? Russell Mokhiber and Robert Weissman

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