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Indian Drug Makers Emerging as a Potential Source of Cipro

By: Jesse Pesta
Wall Street Journal, October 19, 2001

NEW DELHI -- Indian generic-drug companies, which this year emerged as a source of cheap AIDS drugs for Africa, are now emerging as potential sources of antibiotics to fight any widespread outbreak of anthrax in the U.S.

As with AIDS, patent laws are the biggest barrier. Some Indian generic-drug officials believe the anthrax scare could strengthen their argument that international trade rules should allow countries to open markets to generic substitutes during a public-health crisis.
German drug company Bayer AG is the only company allowed to sell ciprofloxacin, the preferred drug for treatment of anthrax, in the U.S., where spores of anthrax bacteria have been mailed to offices and increasing numbers of people have been exposed. The U.S. hasn't yet asked for help from generic companies. Bayer has promised to triple its output of ciprofloxacin, and has said it is exploring the possibility of farming out production to other companies.

On Tuesday, Sen. Charles Schumer of New York telephoned the U.S. subsidiary of one of India's largest ciprofloxacin makers, Ranbaxy Laboratories Ltd., and asked if the company is in a position to ship the drug quickly to the U.S. The company said it could deliver about 20 million pills a month by mid-December, an amount equal to Bayer's normal output. Mr. Schumer, an ally of the U.S. generics industry, is leading a campaign to get the U.S. to stock up on generic versions of the drug, despite patent laws.

Indian law doesn't respect drug-product patents, though the country will have to amend its patent law by 2005 to meet World Trade Organization rules. The Indian industry has thrived by cracking the formulas of foreign drugs and selling them cheaply. There are no fewer than 78 knockoffs of Cipro, the brand name under which Bayer sells ciprofloxacin.

Canada is already moving to purchase ciprofloxacin from a generic-drug company. Apotex Inc. of Canada received an order Tuesday for one million ciprofloxacin tablets from a branch of the country's health ministry. A spokeswoman said that the supplies were part of a backup stockpile and that officials first secured as much supply as possible from Bayer.
Under Canada's patent law, the government can bypass a patent holder in cases of "national emergency or extreme urgency" or where the use is deemed to be "public [and] noncommercial." But Bayer officials assert that the health ministry didn't get permission from Canada's patent commissioner to bypass the Bayer patent. Canada's patent office in Ottawa couldn't immediately be reached for comment.

Doug Grant, a spokesman for Bayer's Canadian unit, said Bayer will consider its legal options.

Any similar move by the U.S. to force open the market for a patented drug would have significant impact on WTO talks refining a 1994 agreement on enacting patent protection on drugs, says Dilip Shah, a consultant who lobbies for Indian generic-drug makers.

Sen. Schumer himself points out that if the U.S. government were to buy and stockpile generic versions of Bayer's patented product, it would expose both the government and the generic-drug makers to lawsuits by Bayer to recoup losses. The other way to open the door to selling generic ciprofloxacin in the U.S. is through compulsory licensing, a controversial feature of patent law that allows mass production of patented drugs in an emergency.

Bayer already has an agreement with Ranbaxy, the Indian company, for licensing a one-pill-a-day formulation developed by Ranbaxy. (The traditional dosage is twice a day.) The product is currently in Phase III trials, and is unlikely to be approved soon enough to have any impact on the current anthrax scare.

Ranbaxy's president, Brian Tempest, said in India, "I believe excess demand for Cipro will be met by Bayer. Compulsory licensing is too emotive an issue in the U.S.A." Ranbaxy is one of several generic-drug makers that have tentative Food and Drug Administration approval to market their versions of ciprofloxacin in the U.S. once Bayer's U.S. patent expires at the end of 2003. Others include Par Pharmaceuticals, Novartis AG unit Geneva Pharmaceuticals Inc., Mylan Laboratories Inc.and Teva Pharmaceuticals.

Compulsory licensing played a key role in the debate earlier this year over AIDS treatment in poor countries. Indian drug company Cipla Ltd. at that time offered to sell an AIDS cocktail for as low as $350 a year per person, undercutting prices that until recently had been in the thousands of dollars. The offer put pressure on African countries -- where AIDS is epidemic -- to enact compulsory licensing to take advantage of the cheap prices. Multinational drug companies eventually cut their own prices, reducing the pressure.

Indian-made ciprofloxacin prices are also well below U.S. levels. A 500-milligram tablet in India sells for about five rupees (10 cents), according to Indian market-research company Org-Marg, compared with a U.S. wholesale price for the Bayer product of $4.67. The U.S. government pays a "best price" of $1.83.

-- Elena Cherney in Toronto, Joel Baglole in Ottawa and Ron Winslow in New York contributed to this article.