WASHINGTON—The Bush administration said Tuesday that it had won a major price concession from Bayer AG for its anthrax medicine, Cipro, after the administration threatened to buy generic alternatives instead.
Kevin Keane, a spokesman for the Department of Health and Human Services, said the government had reached an agreement in principle with Bayer to buy the medicine for less than $1 a tablet. The government is amassing a stockpile of Cipro and other drugs that could be used to treat 12 million Americans for anthrax, and Bayer had planned to charge $1.83 a tablet.
The deal was made after Health and Human Services Secretary Tommy Thompson publicly demanded that Bayer match prices charged by manufacturers of generic alternatives.
The administration's demands marked a nearly complete reversal of its position last week, when Thompson still was emphasizing his desire to safeguard the patent system. A central principle of the patent system is that a patent holder can choose whether to sell a patented product and for how much.
Bayer offered early Tuesday to sell the medicine for $1.75 to $1.83 a tablet, Thompson said, adding that he rejected the bid.
Thompson insisted that the administration was only interested in a lower price for the medicine, and was not concerned about Bayer's ability to deliver enough Cipro.
Bayer repeated Tuesday that it plans to triple its production of Cipro over the next three months to 200 million tablets from about 60 million tablets. The company agreed Tuesday to sell 100 million of these tablets to the United States for its stockpile.
This means Bayer would have about 40 million tablets for the private market above the amount that it normally expects to sell. Bayer charges $4.67 a tablet in wholesale transactions with pharmacies, so Tuesday's deal with the government could hurt its overall revenue.
The German-based drugmaker confirmed that it had reached an agreement with the government but refused to discuss the price.