Bayer’s Headache: U.S. Government Uses Heavy Hand For Cheap Cipro

By Michael Fumento

Investor's Business Daily, October 31, 2001
Copyright 2001 Investor’s Business Daily

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"Bad Bayer! Very bad Bayer!"

What terrible thing did the pharmaceutical company do? It developed an effective drug called Cipro. Therefore it left our government with no choice but to bully the company into discounting the price of the drug it sells to the feds by about half, which was already less than half of its wholesale price.

By so doing, the U.S. has become a thief. And it has opened a Pandora’s box that will haunt us long after the anthrax scare has passed.

Since the first anthrax death on Oct. 5, about 900 Americans have been murdered. Three of these deaths were from anthrax. The total number of exposures is still in the low dozens.

That’s no reason for hysteria, and the public apparently knows it. A just-released ABC News poll shows that only 12% of Americans are scared personally.

But Congress and the media are running around like teenagers in a Freddy Kruger movie. So Health and Human Services Secretary Tommy Thompson made Bayer an offer they couldn’t refuse.

HHS Secretary Tommy Thompson

Cut a sweet deal, he told the company, or Congress will cancel your patent. The German company had no choice.

But it’s we Americans who have the most to lose. For one, this sets a terrible precedent for all companies that develop drugs. Since American companies develop the most drugs, guess who’s heart the dagger is pointed at?

Bayer was accused of profiting from a terrible situation. But isn’t that true of anyone who makes life-saving drugs?

Simple Message

Simply put: No profits mean no drugs. Recently, a prominent activist declared in a Washington Post commentary that all AIDS drugs should be provided free worldwide. All that would guarantee is that in the future no one would get AIDS drugs.

Pharmaceutical companies spend an average of $500 million to bring a single drug to market, according to a January 1996 report by the Boston Consulting Group.

Only one in a thousand compounds that enter pre-clinical testing make it to human testing, according to a study from Tufts University in Boston. Of these, only one in five is approved for sale.

It’s this costly process, not simple greed, that dictates drug developers take advantage of the short period of patent protection the law provides, so that they can recoup development losses by charging more for drugs than actual manufacturing costs.

Remove that protection and you kill the proverbial golden goose. Not only does America’s act of piracy against Bayer threaten future drug development, it even threatens the usefulness of Cipro itself.

White gold? Hardly. And not worth trashing U.S. patent laws.

How so? By encouraging its overuse and misuse, it speeds up the natural process of antibiotic resistance.

Such resistance develops when a person takes an antibiotic he doesn’t need. The drug nonetheless attacks other bacteria in the system. These include those that might be harmful to others but not the pill-popper.

If these bacteria are exposed to an antibiotic but not completely wiped out, they may develop genetic defenses against it. When that strain spreads to other people, it keeps the resistance. Soon enough, germs are thumbing their noses at a once-powerful antibiotic and kicking sand in its face.

"A few strains of Cipro-resistant bacteria already exist, and the extensive use of this drug (for real or potential exposure to anthrax) can only increase the number of those strains," warns Dr. Mark Levy, professor of medicine at Tufts University.

He points out that cheap generic antibiotics like penicillin and doxycycline are just as effective as Cipro against anthrax. Because so many other forms of bacteria are already resistant to these generics, they should be the first line of defense against anthrax, with Cipro kept in reserve for bacteria that have already developed resistance.

Yet "the public is now convinced, if they weren’t already, that Cipro is the only drug effective against anthrax," Levy told me. "Making this deal with Cipro sends the wrong message."

In the short term, our government’s strong-arm tactics saved it a small chunk of change, for which in the long term we could all pay a frightful price.

Read Michael Fumento’s additional work on anthrax and on economics.