That would have been the title of a nifty little lawsuit. On one side, the giant German pharmaceutical company who enjoys United States patent protection on Cipro, the anthrax medication it developed. Opposing the company would be the United States, led by HHS Secretary Tommy Thompson, who threatened, cajoled and beat up the company.
The federal government has not attacked a private company in such a vicious way since the Microsoft/DOJ debacle. Thompson used rhetoric and resorted to threats to force Bayer to the negotiating table.
"Bayer is going to either meet our price, which is less than $1, or else we're going to go to Congress and ask for some support to go in and do some other business," Thompson said on CNN.
Bayer had previously charged more than $5 per tablet for treatment and had already cut the government's price to less than $2. By variously invoking the threat of patent dissolution (which the government had successfully done earlier in the month) and the loss of revenue from a drug that cost Bayer millions to research and produce, Thompson played hardball at a time when no such tactics were needed. The federal government is already spending billions on anti-terrorism measures. Vilifying Bayer was unnecessary, as was negotiating price in the press.
Wolves have been circling Bayer, AG since it pulled two drugs earlier this year. The company’s stock is trading near its 52 week low. Margins in the pharmaceutical business are notoriously out of whack with many other industries. Thus, Bayer reports a 46% gross margin, but only a 10% operating margin. Even as revenues grow, however, the company has stated that its intellectual properties should not be challenged and is seeking remedies in Canada. The United States contract allows Bayer to keep its patent in return for the lower cost. Secretary Thompson has made no apologies for his tactics, claiming he is a “tough negotiator from Wisconsin” and ignoring the fact that his interference in the marketplace sets a dangerous precedent.
Even after the government negotiated its $100 million contract with Bayer to supply 95 million Cipro doses, HHS and Center for Disease Control staff were seeking an alternative. According to Sunday’s Washington Post, the government now claims that a generic antibiotic, doxycycline, is just as effective in treating anthrax. Meanwhile, the government used the oldest trick in the book – national security – to justify its interference. Yet clearly both agencies knew that doxycycline was potentially the drug of choice.
Why then, one is tempted to ask, did Bayer undergo the pressure from the U.S. government earlier this week? Discuss the issue at EAForums.com
Bayer v. The United States 
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