The question of generic Tamiflu

With supplies of one of the few medications capable of making any difference in prevention and outcome of influenza pitifully small compared to global demand, its manufacturer, Roche of Switzerland, is faced with demands it relinquish its licensing rights to allow generic production at a fraction of the current cost. Roche has steadfastly maintained that manufacture of the drug is too complex, time consuming and even dangerous to make widespread generic production feasible. The UN flu chief, Klaus Stohr, has repeated Roche's position at the annual meeting of the Infectious Diseases Society of America. On the other hand, the director general of Taiwan's CDC claims Taiwanese scientist could make the drug and that Roche's claim of difficulty and complexity was overstated and by implication designed to discourage others from attempting it (International Herald Tribune):

"Within a couple months, we can do that if we solve the problem" of patent protection, he said, Kuo added that Taiwan was consulting lawyers and would offer compensation if it invoked compulsory licensing to produce the drug.

[snip]

In a statement on Monday, Roche said the production of Tamiflu was a process involving 10 steps - one of them potentially explosive - and requiring as much as 12 months.

"No one can do it faster," the company said. "Our assumption is that it would take a generic company about three years to gear up," the company said. "Therefore, it does not make sense to out-license manufacturing."

Maybe. I certainly wouldn't take Roche's word on that. But there remains the "problem" of Roche's intellectual property rights which would be violated if countries decided to ignore the licensing and manufacture generics, assuming this was possible.

The usual argument to justify the high costs (and obscene profits) of pharmaceuticals is that it fuels the cycle of discovery and development. Republican Democrat Senator Joe Lieberman, who represents Big Pharma Connecticut in Congress, habitually makes this argument. Whatever its merits in general (many knowledgeable observers don't buy it), the case of Tamiflu doesn't fit. The drug was discovered and developed by a (then) small California biotech company, Gilead Sciences, who brought it from lab to bedside with the help of $50 million cash from Roche. Gilead gave the license to Roche in exchange. That was six years ago. Enough time to manufacture quite a lot of Tamiflu. But Roche didn't.

In June Gilead filed papers to get control of the drug back from Roche, alleging the giant pharmaceutical company had done little to market the drug for most of the years it held the license.

Gilead executives disclosed that they have been peppering Roche with complaints about its marketing of Tamiflu for five years, and that manufacturing glitches have been responsible for earlier shortages of a drug now deemed vitally important to public health.

[snip]

In a carefully worded statement issued after the close of stock trading, Gilead Chief Executive John Martin said, "Roche has not adequately demonstrated the requisite commitment to Tamiflu since its launch in the United States nearly six years ago, nor has it allocated the necessary resources to realize the potential of the product as a treatment and a preventative for influenza.''

The company said Roche had failed to market and manufacture Tamiflu as promised, and was about $18 million short in the royalty payments it allegedly owed.

In a filing made [in June 2004] with the Securities and Exchange Commission, Gilead cited a series of manufacturing problems, including contamination with other drugs, that forced limited product recalls of Roche's Tamiflu in the United States and Japan in 2002. In October 2002, Roche fell short of its goal in production of a pediatric formulation of Tamiflu for the European market after traces of glass were found in a batch.

Those incidents, Gilead contended in its SEC filing, demonstrate that "Roche failed to manufacture Tamiflu consistent with its contractual obligations. By failing to promote Tamiflu, Gilead contends, "a product with important public health benefits, which has the potential of saving many lives, is not reaching those in need. This has materially compromised public health." (San Francisco Chronicle)

So Roche neither discovered, developed nor adequately marketed the drug for which they are now reaping substantial profits (already $450 million this year alone, with much more to come).

So much for Roche's "rights" to this intellectual "property."

Addendum: Reuters reported today that Roche is "outsourcing" some of the ten steps in Tamiflu production in order to meet demand. The company said this had nothing to do with patent issues and it did not intend to outsource the entire production process. Analysts are predicting "windfall profits" for the firm this year.