Flu Drug Ignites Dispute

Demand For Tamiflu Outstripping Supply, Prompts Battle Over Profits

(AP)  The United States ordered another 3 million treatments, which Roche expects to fill by next year.

It will take Roche two years to complete the United Kingdom’s stockpile order to treat 14.6 million of its citizens.

Similar shortages are befalling other countries, too, including Southeast Asian nations thought to be the most likely to serve as ground zero for a major bird flu outbreak. Some 30 countries have placed or plan to place orders to create stockpiles that could treat more than 28 million people.

Several Third World countries are worried they will be overlooked and have suggested that WHO press Roche to relinquish its patent rights to Tamiflu, clearing the way for other companies to produce cheaper, generic versions of the drug.

On Monday, though, WHO Director-General Lee Jong-wook said WHO has for now rejected the call for generics and wouldn’t pressure Roche to relinquish its patent on Tamiflu.

Last week, Roche donated enough pills to WHO to treat 3 million people.

But even as fear and preparation plumps Roche’s profits, Gilead is attempting to wrest control of Tamiflu’s production and commercial rights.

Gilead made $44.6 million on royalty revenues from Tamiflu in 2004 but is on pace to more than double that in 2005, having made $48.1 million in the first six months of the year.

In June, Gilead charged Roche with failing to adequately promote and produce Tamiflu and invoked a contract clause to demand the return of all commercial and manufacturing rights.

Roche denied the charges and the issue appears headed to an arbitrator.

"We are confident we fulfilled our obligations under the licensing agreement," Roche spokesman Terry Hurley said.

If Gilead were to win, Roche would still manufacture Tamiflu for two years while Gilead ramped up its factory.

"We believe this is an opportunistic move on Gilead’s part given that Tamiflu is entering a period of heightened demand," analysts at Credit Suisse First Boston wrote in a note to investors last week.

Gilead spokeswoman Amy Flood declined to comment, but executives of both companies have repeatedly said, including in testimony to Congress, that Tamiflu production won’t be affected by the spat.