Reference no: EM131059598

In the fall of 2001, following the deadly attacks on the World Trade Center, the United States experienced the first cases of anthrax it had seen since 1978. The sources of the anthrax spores were letters sent to the American Media, Inc. building in Florida, Tom Brokaw of NBC News, Dan Rather of CBS News, and Senators Edward Kennedy, Tom Daschle, and Patrick Leady in the United States Senate. There were a series of deaths, cutaneous infections and hundreds of employees at these organizations who tested positive for exposure to the anthrax spores. As a result of these exposures, the most effective antibiotic for treating anthrax, Cipro, was in high demand. Bayer A.G., a German company, owns the patent for this antibiotic and a significant ramp-up in production was needed to meet the increasing demand for those who had been exposed to anthrax. Bayer A.G.'s United States unit went into 24-hour shifts following the anthrax breakouts. Mr. Brokaw held up a bottle of Cipro on his program, 'NBC Nightly News,' and calmed a jittery public by saying, 'In Cipro we trust.' Workers at one of Bayer's U.S. plants cheered with the coverage.

However, executives at headquarters for the company remained silent for weeks about the company's ability to manufacture sufficient amounts of the patented antibiotic. Executives indicated that the company was concerned that if it appeared in the media it would give the appearance of taking advantage of the dire circumstances. Bayer's history made it wary of any involvement in international battles. Bayer A.G. had to pay reparations following World War II and its patent for its world-famous aspirin, Bayer, was stripped from it and awarded to a U.S. company. It was not until 2000 that Bayer was once again permitted to use its name. The company's low profile during the anthrax scares was deliberate and explained by executives as a desire to avoid appearing 'exploitive of the problem' of the infections and illnesses.
Frustrated with the lack of communication from Bayer, Canada suspended Bayer's patent in Canada and ordered other drug manufacturers to begin production of their pending generic formulas for Cipro. Other drug companies do have their own formulas developed and ready to go, but could not produce these generics so long as Bayer held its patent protection. One company, Apotex, indicated its production method would not infringe on Bayer's patent, but Bayer threatened litigation and indicated it would deliver all the Cipro needed and/or ordered by both the United States and Canadian governments. Health officials were skeptical and one stated, 'There's no way you can tell me getting it from six companies is going to be slower than getting it from one company.'

Professor John W. Dienhart, a business ethics professor at Seattle University, stated that Bayer should be a 'good corporate citizen.' He added, 'This is not breaking a patent but adjusting a patent to meet a particular need.'

The U.S. Congress was considering suspension of the Cipro patent in the U.S. in order to ramp-up production even more. The legislation would permit federal judges to suspend patents on the basis of public health issues.

In response to some panic in the United States, pharmacies in Mexico, permitted to sell Cipro without a doctor's prescription, as required in the United States, were ordering large amounts of Cipro, increasing their prices and doing a great deal of profitable business from U.S. orders. For example, the Zipp Pharmacy, located in Ciudad Juarez, a border town, says its orders for Cipro increased 15 times what they were before the 2001 anthrax infections. A nurse buying doses of Cipro for her entire family said, 'What if there were mad runs on it? It's nice to have it around just in case.'

Physicians at the Center for Disease Control (CDC) were concerned about the Mexico purchases and use of the drug without physician prescription. They note the following problems: (1) some people are allergic to Cipro and can become quite ill with just one dose; (2) Cipro has side effects for almost everyone including nausea, vomiting, and loss of appetite; (3) Cipro does have an effect on the brain including possible seizures and hallucinations or simple mood changes and insomnia; and (4) Cipro damages cartilage in the joints, especially when taken by children and is given to children only when there is the absolute need (i.e., there is an infection ongoing). The CDC has advised use of Cipro only upon determination of exposure or infection from anthrax.

Bayer continues to struggle with its position, promises, and public perception as the anthrax infections creased. Bayer's corporate policy is as follows:

We offer our customers a wide variety of products and services in areas ranging from health care and agriculture to plastics and specialty chemicals. Bayer is research-based and is aiming for technological leadership in its core activities.

Our goals are to steadily increase corporate value and generate a high value added for the benefit of our stockholders, our employees and the community in every country in which we operate. We believe that our technical and commercial expertise involves responsibility to work for the common good and contribute to sustainable development.

Bayer: Success through Expertise with Responsibility.

What decisions do you think Bayer should make in this situation? Should it suspend its patent voluntarily? What recommendations should it make on taking Cipro? Should it back the warning from the CDC? Is it wrong for Bayer to profit from this public health problem? Develop a memo that offers ethical guidelines for a Bayer executive.