FOR IMMEDIATE RELEASE: October 16, 2001

SCHUMER: NEW CIPRO SOURCE COULD DRAMATICALLY INCREASE SUPPLY

Federal Law Allows US to Purchase Generic Version of Cipro Directly From Manufacturers; Would Significantly Reduce Prices, Increase Supply

US Senator CHARLES E. SCHUMER today said that the United States could significantly increase its supply of Cipro by purchasing the drug's generic version directly from manufacturers. Schumer called on the US Department of Health and Human Services (HHS) to sign contracts directly with manufacturers to purchase the generic version of ciprofloxacin in bulk quantities at significantly reduced prices, increasing the drug's supply while decreasing its cost to the government.

Bayer holds the patent for Cipro - the brand name version of ciprofloxacin, the most effective drug for treating anthrax - until December, 2003. However, Bayer's ability to produce sufficient amounts of Cipro is questionable and, as the drug's sole patent holder, Bayer charges approximately 50% more than what the generic version is likely to cost. Federal law - 28 U.S.C. §1498 - allows the United States to purchase products like ciprofloxacin for official use from manufacturers other than the patent holder.

"If we increase the number of manufacturers producing Cipro, we're more likely to have enough on hand should we need it," Schumer said. "Knowing we have enough Cipro just in case would go a long way towards calming the public about potential shortages and hopefully dissuade people from buying, stockpiling and taking a drug they currently don't need."

The government currently has enough Cipro to treat approximately 2 million people for sixty days - the length of time generally necessary to treat anthrax. HHS Secretary Tommy Thompson has requested an additional $643 million to purchase antibiotics including Cipro, but that would only cover the treatment of an additional 1.5 million people for sixty days. As the sole patent holder, Bayer can set the price for Cipro and latest reports indicate the price has risen significantly above the $3.20 per pill level. - approaching $400 per patient in total . Patients using Cipro take two pills per day for sixty days. On average, generic drugs cost approximately 50% less than the brand name prescription version, allowing the United States to obtain more than double the current amount available with the funds Thompson has requested. Schumer also said that by purchasing Cipro directly from generic drug manufacturers, Bayer could be forced to lower prices for private purchasers like hospitals who want to increase its supply of ciprofloxacin.

Although Bayer has announced it will begin increasing Cipro production by 25%, its ability to produce sufficient Cipro beyond the additional ten million units already requested by the US government is unclear. Having multiple manufacturers produce ciprofloxacin simultaneously would significantly enhance the nation's ability to obtain as much of the antibiotic as it needed, should the occasion arise. Generic manufacturers including Par Pharmaceuticals, Ranbaxy Pharmaceuticals, and Teva Pharmaceuticals have told Schumer they could produce as much as fifty to sixty million pills per month, treating approximately 1,000,000 people per month. Schumer also pointed out that producing ciprofloxacin in multiple locations decreases the chances of production snags or other problems impeding manufacture of the best known antidote to anthrax.

"We cannot just rely on Bayer to ensure we have a sufficient supply of Cipro," Schumer said. "First, Bayer can only produce so much Cipro, and we should not put our best response to anthrax in the hands of just one manufacturer. Second, buying Cipro only from Bayer - who charges a lot more than generic manufacturers would - means we spend a lot more and receive a lot less. Hopefully, we won't even need to use the Cipro we already have on hand, but if we make arrangements to purchase it from multiple generic drug manufacturers, we'll have it if we need it."

Schumer also called on the Food and Drug Administration (FDA) to grant final approval to the five generic drug manufacturers who already hold tentative approvals to manufacture ciprofloxacin. Any manufacturer seeking approval solely to sell its product to the United States government can file a "paragraph IV certification" and receive clearance to begin production immediately. Denying certification could delay availability by at least 60-90 days, and since generic production of the drug will take an estimated 60-90 days before it becomes available, additional supplies of ciprofloxacin could be unavailable until April, 2002.

Schumer said that in order for any of the generic manufacturers to reach agreements with HHS, the United States would have to agree not to seek indemnification from the generic drug manufacturers if Bayer successfully sued, and would also have to agree to indemnify the manufacturers in the event Bayer successfully sued them for patent infringement. Federal law permits the United States to purchase products from manufacturers other than the patent holder, but says that the government could be liable for the patent holder's recovery of "reasonable and entire compensation for such use and manufacture." 28 U.S.C. §1498. No injunction preventing the generic manufacturers from producing ciprofloxacin and selling it to the government is available under §1498.

"Although it seems unlikely that Bayer would sue to prevent the United States from obtaining Cipro," Schumer said, "if that happens, the generic manufacturers need to be protected. Otherwise, they can't sell Cipro to the government and that puts us back to square one."

Although Bayer is the single patent holder for Cipro, the validity of its patent is in question. The Federal Trade Commission (FTC) is currently investigating possible anti-trust violations concerning a reported payment of over $200 million by Bayer to Barr Laboratories, the first generic drug manufacturer of ciprofloxacin to file with the FDA, to keep Barr's product off the market and avoid competing with Cipro. Bayer's payment to Barr prevents any and all generic drug manufacturers from producing ciprofloxacin until Bayer's patent expires more than two years from now.

Schumer is the author, along with Senator John McCain (R-AZ), of the Greater Access to Affordable Pharmaceuticals Act (GAAP), bipartisan legislation to improve access to generic drugs. The legislation would remove a number of obstacles currently blocking entry of many low-cost generic drugs to the market, including eliminating potential abuses of the 180-day exclusivity period granted to the first generic applicant, which has enabled Bayer to keep lower cost versions of ciprofloxacin off the market. The bill makes the exclusivity period available to the next-filed applicant if the first applicant has reached a financial settlement with the brand-name to stay out of the market until the patents have expired, fails to go to market within 90 days once their application is effective, does not get FDA approval within 30 months, fails to challenge a new patent within 60 days, withdraws their application, or is determined by the HHS Secretary to have engaged in anti-competitive activities.

A copy of Schumer's letter to Thompson is attached.

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