Following the deadly September 11, 2001, attacks on the World Trade Center, the United States experienced the first cases of anthrax it had seen since 1978. The anthrax spores were found in letters sent to the American Media, Inc., building in Florida; the offices of Tom Brokaw of NBC News and Dan Rather of CBS News; and the offices of Senators Tom Daschle, Patrick Leahy, and Edward Kennedy in the United States Senate. There was a series of deaths, cutaneous infections, and hundreds of employees at these organizations who tested positive for exposure to the anthrax spores. In addition, there were at least two anthrax deaths for which the source of anthrax was not readily located.

As a result of these exposures, from letters that were mailed on September 18, 2001, the most effective antibiotic for treating anthrax, ciprofloxacin, was in high demand. Bayer AG, a German company, owned the patent for this antibiotic, which it called Cipro. At the time the patent was slated to expire in December 2009.

However, executives at headquarters for the company remained silent for weeks about the company’s ability to manufacture sufficient amounts of the patented antibiotic. Executives indicated that the company was concerned that if it appeared in the media it would give the appearance of taking advantage of the dire circumstances.

Bayer’s history made it wary of any involvement in international battles. Bayer AG had to pay reparations following World War II and its patent for its world-famous aspirin, Bayer, was stripped from it and awarded to a U.S. company. It was not until 2000 that Bayer was once again permitted to use its name. The company’s low profile during the fall 2001 anthrax scares was deliberate and explained by executives as a desire to avoid appearing “exploitive of the problem” of the infections and illnesses.

Frustrated with the lack of communication from Bayer, Canada suspended Bayer’s patent in Canada and ordered other drug manufacturers to begin production of their pending generic formulas for Cipro. The Canadian national health service purchased one million of the Cipro-generic from another manufacturer. Other drug companies did have their own formulas developed and ready to go, but could not produce these generics so long as Bayer AG held its patent protection. One company, Apotex, indicated its production method would not infringe on Bayer’s patent, but Bayer threatened litigation and indicated it would deliver all the Cipro needed and/or ordered by both the United States and Canadian governments. Health officials were skeptical and one stated, “There’s no way you can tell me getting it from six companies is going to be slower than getting it from one company.”

There has been antitrust and patent litigation surrounding Cipro. In 1997 Bayer entered into a settlement with Barr Laboratories, Inc. in which Bayer agreed to pay Barr and another generic manufacturer of ciprofloxacin $24.55 million each to not produce the drug. Barr agreed to drop its challenge to Bayer’s patent to Cipro in exchange for the payment. That led to antitrust suits against Barr, Bayer, and another drug company for this agreement, which the suits contended served to eliminate competition for the sale and production of ciprofloxacin.

The production levels needed in order to supply Cipro for the anthrax cases, as well as for those who had been exposed to the sources (about 20,000 Americans), required a significant ramp-up. Bayer AG’s United States unit went into 24-hour shifts following the anthrax breakouts. Mr. Brokaw held up a bottle of Cipro on his program, “NBC Nightly News,” and calmed a jittery public by saying “In Cipro we trust.” Workers at one of Bayer’s U.S. plants cheered with the coverage.

On October 23, 2001, the following content appeared in a full-page ad in The New York Times:

A Message from Bayer Corporation to the American People

In response to the attacks on America and as part of the fight against bioterrorism, the people of Bayer are substantially increasing production of Cipro (ciprofloxacin).

Our commitment to the American public is clear: We will meet this threat head on. Bayer is now working 24 hours a day, seven days a week to assure that Americans are equipped to fight this threat.

In the last few weeks, we have shipped tens of millions of Cipro tablets, have tripled production and have committed to shipping 200 million tablets over the next three months.

We will continue to work with the nation’s healthcare professionals to ensure appropriate use of our antibiotics. We stand ready to support the United States government in providing Cipro to meet emergency needs.

As a world leader in health care, we take seriously our responsibility to help protect and improve your welfare. We will face this latest challenge together … and we will succeed.

You have our commitment.

Bayer

The U.S. Congress was considering suspension of the Cipro patent in the U.S. in order to ramp-up production even more. The legislation would permit federal judges to suspend patents on the basis of public health issues. Secretary of Health and Human Services Tommy Thompson also issued a public threat of suspending Bayer AG’s patent in order to meet the increasing demands.

In response to some panic in the United States, pharmacies in Mexico, permitted to sell Cipro without a doctor’s prescription, as required in the United States, were ordering large amounts of Cipro, increasing their prices, and doing a great deal of profitable business from U.S. orders. For example, the Zipp Pharmacy, located in Ciudad Juarez, a border town, said its orders from Cipro increased 15 times what they were before the anthrax infections. A nurse buying doses of Cipro for her entire family said, “What if there are mad runs on it? It’s nice to have it around just in case.”

The Internet business for Cipro via online prescription services was booming. MedicalWeb.com was a company that was found at the root of most Web sites providing Cipro information, which included the following:
2-buy-cipro.com; Cipro-for-anthrax.com; Cipro-antibiotics-anthrax-vaccines.com; 1-cipro-4-anthrax.com; Cipropharmacy.com; Ciprostockpile.com; Gas-masks-israeli-gasmasks.com; Cipro-for-less.com.

A subsidiary of MedicalWeb.com was MedicalGroup.com, a service that connected patients with doctors who would write prescriptions for them. MedicalGroup.com had 35 physicians with whom it worked who wrote prescriptions for patients after interacting with the patients online. The prescription was then filled by 1stOnline-Pharmacy.com, another subsidiary of MedicalWeb.com.

The company’s business jumped from filling 6 to 10 Cipro orders per day to over 100 per day. The increase in activity and national attention brought regulatory attention to MedicalWeb, a company based in North Carolina. The company had already irritated professional organizations, and the newfound earnings only added to the tense relationships. CEO Tani Malik of MedicalWeb.com said, “It’s almost, ‘Be careful what you wish for.’ We did want people to know about Virtual-Medical Group, but my fear is people see the press and think we’re arrogant.”

The U.S. Government began a program for purchasing Cipro from Bayer and negotiated a price of $1.00 per tablet, a discount from the usual $183 per tablet. The first 100 million tablets would cost only 95 cents each. The government negotiated the price by using its bargaining position of suspending the patent, as the Canadian government had done. The price Bayer charged wholesalers was $5.00 per pill.

Bayer refused to grant interviews on the discount program but its CEO for American operations, Helge H. Wehmeier, said, “I was smiling going in because how often in your life do you and your company have an opportunity to make a difference?” Bayer would also not respond to a question on whether it was making a profit. But drug industry analysts indicated the price was perhaps enough to cover costs but little more.

Three other drug manufacturers offered their drugs free if the federal government would approve them for the treatment of anthrax. In addition, all of the drug manufacturers formed a task force so that they could work jointly with the federal government to provide vaccines and treatments needed because of the threats of bioterrorism. There was precedent for such cooperation. During World War II the pharmaceutical companies worked together to develop both penicillin as well as drugs for the treatment of malaria that affected troops in the Pacific as well as in Africa.

Physicians at the Center for Disease Control (CDC) were concerned about the Mexico purchases and use of the drug without physician prescription. They noted the following problems: (1) some people are allergic to Cipro and can become quite ill with just one dose; (2) Cipro has side effects for almost everyone including nausea, vomiting, and loss of appetite; (3) Cipro does have an effect on the brain including possible seizures and hallucinations or simply mood changes and insomnia; and (4) Cipro damages cartilage in the joints, especially when taken by children, and is given to children only when there is the absolute need (i.e., there is an infection ongoing). The CDC had advised use of Cipro only upon determination of exposure or infection from anthrax.

Bayer continued to struggle with its position, promises, and public perception as the anthrax infections increased. Baxter’s corporate policy is as follows:

We offer our customers a wide variety of products and services in areas ranging form health care and agriculture to plastics and specialty chemicals. Bayer is research-based and is aiming for technological leadership in its core activities.

Our goals are to steadily increase corporate value and generate a high value added for the benefit of our stockholders, our employees, and the community in every country in which we operate. We believe that our technical and commercial expertise involves responsibility to work for the common good and contribute to sustainable development.

Bayer: Success through Expertise with Responsibility.

Last updated: August 2, 2001