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

[scottobear]

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 circlek 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.)

Comments

[artemii.livejournal.com]

the reason antibiotics and other meds are so expensive here in america is because almost every other country has price controls on them, and they say they have to recoup that cost somewhere -- here.

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[scottobear.livejournal.com]

If I didn't have insurance (I pay about $80 a month), instead of paying $15 for three prescriptions, I'd have had to pay $185.

I don't buy that 'recoup' excuse at all. law of supply and demand would say "well, if you don't want it at the price we have, we'll sell it somewhere else then, and you can do without."

[artemii.livejournal.com]

well, i don't like it either, but they are capitalist companies trying to make as much money as possible. remember that they sued in south africa so that generic hiv/aids meds would stop being available, even though they were much cheaper.

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[scottobear.livejournal.com]

That's true! it's important to remember they're in it for the money, not to help people.

[circlek.livejournal.com]

The main use for Cipro is Urinary Tract Infections, sinusitis, and bone infections. Of course now it is used for Anthrax.

We get updates on their products and prices daily.

Bayer took a major hit in the market a few months ago when they discontinued Baycol and were sued for a few deaths relating to the product.

I think they are just trying to catch up with money issues they were having.

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[scottobear.livejournal.com]

I have little doubt! It's all aobut the $$.

[blackhellkat.livejournal.com]

Yep heroin and morphine (they are both the same drug really one breaks down into another in the human ody...I've just forgotten which eeek!) are cough supressants, but they had been used for ages as such. I wish I still had the link (from a drug class I took)to the ad advertising a syrup with heroin for children from the turn of the century.

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[scottobear.livejournal.com]

*laughs


Child have a cold? Try trainspotting brand!

[blackhellkat.livejournal.com]

Damn I can't find the ad with the children playing.....but I found this one

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[scottobear.livejournal.com]

very nifty! thankee!!

[cath555.livejournal.com]

or pretending they are Canadian or something

heh. the canadian government's been having probs with patents- but I think it's their own doing

http://www.globeandmail.com/servlet/RTGAMArticleHTMLTemplate/B,A/20011024/wrock2410?hub=homeBN&tf=tgam/realtime/fullstory.html&cf=tgam/realtime/config-neutral&vg=BigAdVariableGenerator&slug=wrock2410&date=20011024&archive=RTGAM&site=Front

(I worked for Health Canada over the summer- I'm not to suprised. The legal dept is essentially staffed by moneys with typewritters, and a few brilliant students :-P)

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[scottobear.livejournal.com]

Ah! Very interesting! Thanks for the link, kindly Canadian!

[isis.livejournal.com]

I was actually going to mention the heroin thing, but I see you know it already... ;-)

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[scottobear.livejournal.com]

The great Scotto knows all, sees all! :)

Pay no attention to the hippie behind the curtain.

[i.livejournal.com]

actually, from my memories of econ101, the supply and demand thingie is a function of both sides. if demand goes up relative to supply, as it is now, the price rises, which creates an incentive for more production. at some point, supply catches up and surpasses demand, at which point the price goes down. this all works very well on paper. patent law screws with it big time, however, allowing the owner of the patent to keep the price artificially high. since the profits of pharmaceutical companies are more or less in line with other industries, i don't really see this as price gouging. they do invest billions at considerable risk looking for cures. one would think, however, that a sense of civic responsibility, and just plain PR sense would tell bayer to relax a little in this case.

[absolution.livejournal.com]

if we could account for externalities accurately and without murky intentions in regulation...the model would work better...

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[scottobear.livejournal.com]

Right you are... introducing humans into the equation always confuses things. :)