The economics of anthrax (or, what Scotto thinks about, reading about antibiotics)

This whole Bayer thing about Cipro is starting to piss me off.

Now, when I was first being indoctrinated with the basics of the American Dream, we were taught all about the “Law” of Supply and Demand. There was even a Warner Bros. cartoon to help with the visuals. A Japanese (Occupation Era) mouse comes to visit an American mouse in New York and is taught all about this basic law of the universe. They skitter about the floor of Macy’s and see construction and get a tutorial from a wise academic mouse. The wheels of industry got the WB soundtrack for construction and mechanical processes.

This law of nature states that when customers buy more, the price goes down. Supply and demand. Because if you don’t lower your price your *competition* will. But that’s OK, because since the demand is so great you’ll more than make up the difference through volume volume volume. Somewhere in there is some stuff about investing in your manufacturing infrastructure to lower production costs.

I would think that a government contract to buy 100,000,000 tablets of an antibiotic that they wouldn’t have bought before would be good news for a pharmaceutical company that owns the patent on the one (1) antibiotic that is prescribed for anthrax. Even the generic version of Cipro pays a royalty to Bayer. Barr (the generic Cipro manufacturer) says that they could sell the tablets for less than $1 a piece if the royalties were removed. Ahem… that’s *sold while still making a profit* for less than $1 a piece. Bayer charges $4.67 a tablet (no royalties) which I’m sure they’ll say is to recover the *enormous costs* of the research that went into the creation of Cipro. Uh huh — and I *believe* you too. Just like a believe you will *lose* money by selling 100,000,000 tablets on top of your normal sales and on top of the sudden boom in sales due to everyone in the US with a health plan scrambling to get their hands on some. Or slipping over the border to get Mexican Cipro. Or pretending they are Canadian or something.

Canada found an interesting way to get everyone to sit down and haggle: they threatened to green light Canadian generics and ignore the patent. Wartime donchaknow. Suddenly Bayer discovered a way to slash the price.

Anyone exposed to anthrax should take 2 Cipro a day for 5 days, then switch to other generic antibiotics for 55 days. So when we read about the government stockpiling treatment for anthrax we’re talking about a lot of pills. Which, incidentally, all have expiration dates. It’s raining soup and the pharmaceutical companies are complaining about the size of their buckets.

Fun FYIs about Bayer (I bet knows all this already):

Bayer are the guys that first produced heroin in order to get rid of their excess production of vinegar (vinegar+morphine=heroin) and then marketed heroin pills as cough reliever.

(Not to mention heroin as a cure for morphine addiction.)

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