Science

Antiviral Drugs Discounted For Government

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The threat of a flu pandemic means more demand for antiviral drugs. The two European companies that make them — Roche and GlaxoSmithKline — stand to gain monetarily. But it's not likely to be a profit bonanza.

RENEE MONTAGNE, host:

The threat of a flu pandemic means more demand for anti-viral drugs. And the two European companies that make them, Roche and Glaxo Smith Kline, stand to gain monetarily.

But it's not likely to be an economic bonanza, as NPR's Wendy Kaufman explains.

WENDY KAUFMAN: Roche and Glaxo are pharmaceutical giants. And their flu-fighting drugs, Tamiflu for Roche and Relenza for Glaxo, are but a tiny part of their global revenue stream. Relenza accounted for roughly one quarter of 1 percent of Glaxo's total sales last year.

The biggest buyers of Relenza and Tamiflu are governments and global health organizations. And they typically don't pay top dollar for the drugs. They get them at deeply discounted prices.

Terry Hurley, a spokesman for Roche, says the wholesale price for a 10-day treatment course of Tamiflu is about $82. The U.S. government pays $19.

Mr. TERRY HURLEY (Spokesman, Roche): It's a nice discount for the government, yes it is. But it's the right thing to do. We're fortunate we have a drug that both the CDC and the World Health Organization says is active against this virus.

KAUFMAN: In 2005, governments and others began stockpiling these drugs. The U.S. government, for example, bought up 50 million treatment courses. With large quantities already on hand, many of the world's largest purchasers may not have to buy much more, at least not right now. To be sure, some corporations, wholesalers and other institutions are putting in new orders, and more sales mean more profits. But Jeffrey Moe, a former Glaxo official who's now an executive in residence at Duke's business school, says…

Mr. JEFFREY MOE (Director, Health Sector Emerging Issues and Development, Duke's Fuqua School of Business): I don't think this is something where you go, oh, boy, we're going to make a bunch of money. It's really more, this is a public health responsibility that we have and that the governments share. But I don't think, for any of them, this is some huge windfall.

KAUFMAN: Analyst Linda Bannister of the investment firm Edward Jones doesn't see huge profits, either - not in the flu-fighting drugs nor in selling a yet-to-be-developed vaccine.

Ms. LINDA BANNISTER (Analyst, Edward Jones): It would have to be done at a pretty low cost, so we don't think it would be a profit windfall for any of these companies.

KAUFMAN: There's the phrase again: no windfall. Bannister says when it comes to big profits, the pharmaceutical firms are looking at drugs for things like Alzheimer's and cancer.

Wendy Kaufman, NPR News.

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