“I’m just trusting in God and Cipro,” a Washington, D.C., postal worker said recently about the anthrax scare and the antibiotic most frequently named in connection with it.
His sentiments demonstrate the power that brand identification can have. The more you can make your product different from alternatives, the more pricing power you have.
Take raisin bran breakfast cereal. At least three major firms make raisin bran. I know that I can’t tell which is which unless I see the box. Yet Post, General Mills and Kellogg spend millions on advertising to convince the public that their cereal is superior to the others. If they can, they gain at least some degree of monopoly power and can charge higher prices.
Cipro is a broad-spectrum antibiotic manufactured by Bayer, the German chemical and pharmaceutical giant. Bayer has a patent that gives it the sole right to manufacture this particular chemical compound and sell it as a drug. The patent expires in 2003.
Cipro competes with many other antibiotics. But its name has been repeated thousands of times in media reports in the last three weeks as the best treatment for persons exposed to anthrax. Many people apparently now believe that it is the only treatment.
Actually, anthrax responds to treatment from most antibiotics, including old standbys such as penicillin or tetracycline, neither of which is covered by a patent anymore. But a hitherto obscure report on anthrax treatment published in a medical journal a few years ago listed Cipro as the first and preferred treatment for anthrax exposure.
This was not based on any clinical trials or laboratory experiments comparing how well Cipro performed compared to penicillin or other antibiotics. The authors reportedly listed it first simply because slightly fewer people have allergic reactions to Cipro than to penicillin. They also stated clearly in the article that many other antibiotics were known to be just as effective.
But this one reference to Cipro resulted in it being mentioned or listed first in any number of physicians’ drug reference handbooks and training classes. It was mentioned at numerous press conferences and reported in thousands of newspapers or broadcasts.
The idea that Cipro is the best and only correct treatment for anthrax is now firmly established in the mind of the public. As a result of worldwide publicity, Bayer achieved for free what other companies spend millions on, differentiating its particular product from competing perfect substitutes.
But because so many people believe that Cipro is a unique treatment, there was pressure on governments to break Bayer’s patent and allow other firms to make legal generic copies of Cipro. Bayer was in the incongruous position of petitioning the U.S. government to promote use of doxycycline, a competing antibiotic, as an anthrax treatment in an effort to reduce political pressures to break its patent.
Last week the power of the Cipro brand loosened somewhat: The government approved penicillin and doxacycline as anthrax treatments and ordered more than 1.2 billion tablets of doxacycline from Ivax Pharmaceuticals.
Many brand-name pharmaceutical companies, including Abbott Laboratories, Johnson & Johnson, Glaxo-SmithKline and Bristol-Meyers Squibb, are supplying the government with antibiotics, some at no cost, while seeking approval to market their drugs specifically as anthrax treatments. Bayer also agreed last week to lower the price it charges the government for Cipro.
It is ironic that what would have been a windfall in other circumstances turned into a disadvantage for Bayer.
© 2001 Edward Lotterman
Chanarambie Consulting, Inc.