Bayer Responds to Cipro Crisis
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Bayer Responds to Cipro Crisis

In the nine months leading up to September 25, there were just 13 media stories containing the words anthrax and Cipro. Over the next 40 days, there were more than 3,750.

Paul Holmes

Ask executives at Bayer whether they were able to take advantage of the public relations opportunity presented to them by the sudden interest in their anthrax antibiotic Cipro and they will answer unashamedly in the negative. In fact, the company went to great lengths not to take advantage of the sudden surge in demand for its product in the wake of bio-terrorism attacks on the nation’s media, on Congress, and on the U.S. mail system.
But ask these same executives whether they believe they came out of the controversy that ensued with their key stakeholder relationships—with employees, with the government, with the healthcare establishment, with pharmacists—enhanced and they will answer resoundingly in the affirmative. The U.S. leadership of the German pharmaceutical giant insists it did the right thing throughout the crisis, and that the people who matter know it—even if the media did not always understand.
The Cipro crisis was unusual in its intensity and its suddenness. In the nine months leading up to September 25, when the first anthrax-laden letter arrived at the NBC offices of Tom Brokaw, there were just 13 media stories containing the words anthrax and Cipro, according to a search using the Dow Jones Interactive news retrieval service. Over the next 40 days, there were more than 3,750.

September 11  
In 1991, the United States government had asked Bayer to supply Cipro to its soldiers in the Gulf War—the company ultimately donated around 10 million tablets—and throughout the 90s Bayer worked with the government on a series of studies on anthrax, so when executives at the company realize the nation is under terrorist attacks, they also realize the government might be needing more Cipro.
“I heard in the evening that they were testing for anthrax in New York,” says Wolfgang Plischke, president of the company’s pharmaceutical division. “I asked some of my people whether they thought this was a bioterrorism attack, and no one knew, but we knew that if it was, Cipro was the only drug approved or inhalation anthrax.”
So long before the anthrax attacks begin, Bayer makes the decision to ramp up production of anthrax just in case, more than tripling its normal output from 240 million tablets a year to around 200 million tablets a quarter.

September 26  
The Associated Press produces a lengthy feature story on the nation’s bioterrorism defenses. “Stashed in secure government warehouses around the country are 400 tons of antibiotics and other medical supplies ready for what seemed until two weeks ago to be an unimaginable catastrophe—a terrorist germ attack,” says the article, which will turn out to be frighteningly prescient.
The article quotes experts who say the nation is better prepared than it was two years, but still “woefully unprepared.” It mentions Cipro, but not prominently.

October 1  
Cipro production is expanded. Bayer puts its main factory in West Haven, Conn., on a 24-hour day, seven days a week (it had been operating a 40 hour week) and converts more of its machines in Connecticut to Cipro productions. It also makes plans to open a factory in Germany that will be dedicated to Cipro production.
“If you look at this in terms of phases, the first phase ran from September 11 to early October,” says Jeff Taufield, a partner at New York strategic communications firm Kekst & Company, which is helping Bayer handle the Cirpo crisis. “In this phase, the company was ramping up production but it was doing so quietly. We didn’t want to feed into the fear that was already out there and we didn’t want to be opportunistic, so we didn’t say anything. There was a conscious effort to keep a low profile.”

October 6  
A Florida man, an employee of tabloid publishing giant American Media, becomes the first to die of inhalation anthrax. His death moves the anthrax story to the front page of almost every national newspaper, and the lead story on most news broadcasts.
“This marked the beginning of the second phase,” says Taufield. “Not only was America under attack, but it was under attack from bioterrorism. From this point on, Bayer became much more assertive about its ability to supply whatever the nation needed to combat these attacks. Our focus was on that one issue: supply.”

October 12  
Bayer holds its first teleconference with Department of Health & Social Services deputy secretary Claude Allen.

October 15  
Health & Social Services secretary Tommy Thompson calls Wehmeier and asks whether he can supply 100 million tablets in the fourth quarter. Wehmeier calls Plischke, who tells him he will have an answer within 24 hours.
Meanwhile, a letter containing anthrax is received at the offices of Senate majority leader Tom Daschle. The ensuing confusion—no one in the government can say for sure how virulent the strain is, or where it came from—serves to further heighten fears of the disease. “Public awareness was suddenly at a 150-volt level,” says Plischke.
The day ends on a positive note for the company, however. At the end of his nightly news broadcast NBC news anchor Tom Brokaw—who received an anthrax-laden letter on September 25—holds up a sample of Bayer’s anti-anthrax treatment. “In Cipro we trust,” he says.

October 16  
Wehmeier calls Thompson to let him know that the company will have no difficulty supplying the 100 million tablets he had asked for. “He asked when could we get together to sign a contract and I said right away,” Wehmeier recalls. “I told him we could fly to Washington that afternoon.” But Thompson cannot meet yet. He is traveling, and he has to wait for Congress to approve additional anti-terrorism funding, including $650 million for increasing U.S. stockpiles of antibiotics.
Bayer holds its first press conference, attended by 120 reporters. “It was the biggest press conference we had ever held,” says Pilschke. The press conference is designed to communicate a single message: the company has enough Cipro to meet any foreseeable demand.
Says Mark Ryan, the company’s senior vice president of corporate communications, “We had held national news conferences before, but they had always been pretty narrow in their focus—usually a single product or a specific initiatives—and they have been attended by a narrow range of media. In this case, the interest was as wide as it was deep, and the people with the most intense interest were national tier one media. That wasn’t what we were used to.”
In a press release, the company says it will produce 15 million tablets a week by running its manufacturing plants on a 24-hour, seven-days-a-week schedule and reopening one of its production facilities just for Cipro. Says Karen Dawes, the company’s senior vice president for marketing, “We have fulfilled every order to date from the U.S. government with the requested delivery schedule, and we are prepared to work with the government to fulfill future orders.”
Dawes also makes it clear that Bayer will not take advantage of the crisis to raise prices. “Bayer pledges that as long as Cipro is needed to combat the immediate terrorist threat, all Cipro made by Bayer will be sold at the same prices that were in effect before September 11. If wholesalers and retailers follow our lead, there should be no increase in Cipro prices to the public.”
But not everyone is mollified. Despite Bayer’s commitment to meeting demand, New York Senator Charles Schumer—a longtime critic of the pharmaceutical industry—calls on the government to override the company’s patent so that generic manufacturers can join in the production of Cipro.
“I couldn’t believe it,” says Frank Morich, head of Bayer’s global health business in Brussels. “All of a sudden, it was, ‘In Cipro we trust, but not in Bayer.’”
“The Daschle letter on the 15th marked the start of the third phase,” says Taufield. “We were contacted by Tommy Thompson and the Schumer made his public statement calling for the patent to be overridden. We did not engage Schumer. We did not want to debate this issue through the media. We wanted to stay focused on what we believed was of the utmost importance to the American public, which was supply and safety.”

October 17  
In West Haven, the company’s employees are working around the clock to make sure Bayer can meet increased demand for the drug.
“It was taken up immediately by employees,” says Plischke. “When we told people we were going to try to triple production, everyone was very keen. Cipro had been close to their hearts for years. There was never any doubt they would do everything for Cipro, to help the government and protect the American public. If I look at these people, and how they stepped up in this crisis, it makes me very proud.”
Wehmeier, meanwhile, is using voice mail to communicate with employees, to make sure they understand that the company is doing the right thing. “I was particularly concerned about the misrepresentation we were seeing in the media about what we wanted to do. I wanted our people to hear from me what we were doing and why. I like to use voice mail for that, because I think people can hear the emotion in your voice. I wanted to assure them that I was running the Bayer ships with a true hand.”
Externally, however, the news is not so good. The Canadian government announces that it will override Bayer’s patent on Cipro and invite a generic drug manufacturer to produce close to one million tablets.
“There was no true logic behind it, but there was an emotional logic behind it,” Wehmeier says of the calls to override the company’s patent. “There was also a feeling that this was part of a bigger issue, and if they could override our patent it might in the future lead to lower drug prices, which was the true agenda of those who were promoting this idea.”

October 18  
Wehmeier calls Thompson again, but Thompson—under pressure from all sides on the anthrax crisis—says he is not yet ready to meet. Thompson mentions that some people would like to override the company’s patents, and Wehmeier assures him such action is not necessary, that the company is more than capable of meeting demand.
“There were different interests involved at this point,” says Plischke. “The generics were putting pressure on the government. Our strategy was simply to continue to assure people that we could supply whatever was needed, and we stuck to that strategy.”
The company also makes its first donation of Cipro, two million tablets for approximately 200,000 firemen, police officers, and health workers who may have been exposed.
“We wanted to provide safety and security to the people who needed it most,” says Wehmeier. “We wanted to give people who were on the front lines, at sites of potential exposure to anthrax, peace of mind.”
Meanwhile, Bayer executives begin a series of newspaper interviews. Karen Dawes and head of technical operations Mary Kuhn meet with reporters from The New York Times.

October 19  
The Los Angeles Times publishes an op-ed piece by Robert Kutter, co-editor of the liberal American Prospect, in which he calls Bayer and other pharmaceutical companies that refuse to surrender their patents “war profiteers.” Says Kutter, “Let’s rein in drug company profits and rebuild our public health system so that all Americans can get the drugs and vaccines that we need at the lowest possible cost.”
Kutter makes no mention of the downside of his proposal, which is that stripping drugs of their patent protection removes the incentive for innovation, that companies will not pour millions of dollars into speculative research if they can’t make a profit. It’s an argument that has been made many times by the Pharmaceutical Research & Manufacturers Association, and it’s one that is repeated by Bayer in this case.
“I can only warn people that discussions like this lead quickly to the heart of the research base of the pharmaceutical industry,” says Moric. “In order to carry out its research, the pharmaceutical industry needs a reliable legal environment and that includes that patents are respected.”
Still, the company is not aggressive enough in its response to please some supporters, who believe it needs to address the cost issue more proactively—especially after the Canadian government announced it would override Bayer’s patent on Cipro in Canada.
“We decided we were not going to be knocked off message,” says Ryan. “That message was supply, supply, supply. We had made a commitment to the United States government that we would deliver enough Cipro to meet its needed. The patent issue was a side discussion that somehow made its way into the center of the room, but we refused to be distracted by it, because we felt it was not relevant to the most important issue.”
The company was reassured by the feedback it was getting from opinion leaders in Washington. Says Taufield, “Bayer received a very clear message from the Hill that the protection of intellectual property rights was the foundation of American entrepreneurialism, and there was no support for action that would undermine that foundation. They just wanted to be assured of three things: that we could supply enough Cipro; that we could do it on time; and that we could do it at a reasonable price. We were able to reassure them on all three.”
Also encouraging is an editorial meeting between Plischke, Kuhn and Dawes and reporters from The Wall Street Journal, who clearly understand the importance of the patent issue.
Meanwhile, it is becoming apparent that there is a huge demand for Cipro, particularly in New York, among ordinary consumers, and that the drug is being over-prescribed. Instead of prescribing two tablets a day for five days, and the prescribing another antibiotic, many physicians are prescribing Cipro for 60 days at a time. With many pharmacies stocking only 100 or 200 tablets when the anthrax attacks occurred, a single prescription can wipe out their entire supply.
That is feeding concern that there might not be enough Cipro to go around, even though the government has a huge stockpile. That creates a perception problem for Bayer, but Wehmeier refuses to condemn concerned consumers who are asking their physicians for the antibiotic.
“The relationship between patients and doctors is one of trust and confidence,” says Wehmeier. “Many people were in emotional distress. America has never been exposed to anything like this before, and to many people it seemed the attacks were indiscriminate. If you are a parent living in the Midwest and you have children in New York, you are very concerned. If you call your doctor and say you fear your children have been exposed, you want him to do something.”

October 20  
The first Bayer ads addressing the Cipro crisis appear in The New York Times and Washington Post. Under the headline, “Our Commitment to You,” the ads promise: “We stand ready to support the United States government providing Cipro to meet emergency needs…. As a world leader in healthcare, we take seriously our responsibility to help protect and improve your welfare.”
Starting the next week, the ads run in additional publications, including The Wall Street Journal, USA Today, and The Financial Times.
But while Bayer is making its case through paid media, editorial columns are questioning its strategy. The New York Times suggests that Bayer “seems uncertain in response to [the] Cipro frenzy.” In an article that focuses on the company’s business and public relations response to the demand for its product, Times writer Edmund Andres says, “Few companies have seemed as unprepared as Bayer was when the reaction to anthrax attacks transformed its antibiotic Cipro into the most sought-after pharmaceutical since Viagra.”
One criticism is that Manfred Schneider, the German company’s chief executive, has yet to make any public comment on the issue. Indeed, the public relations effort has been led by the U.S. management team, including Wehmeier and Plischke.
“We were here in the U.S. and we could feel how this issue was heating up,” says Plischke. “In Europe, you couldn’t feel the threat on anthrax and you couldn’t understand how it was being reported. Every moment it was something new about anthrax. We were the ones in constant contact with the U.S. government. We had to make decisions here.”
“Our public relations strategy from the beginning traveled in a very straight line,” says Ryan. “Because we were the sole manufacturer of Cipro, we were thrust on to the national stage, but we were not there by ourselves. We had to consider our partners, including the federal government, our wholesalers, and the pharmacists.”
The Times article quotes a public relations executive critical of Bayer’s efforts. “They have a once-in-a-lifetime opportunity to establish themselves as a friend of the United States, but instead they come across as a group of German bookkeepers,” says Stephan Richter, president of Trans-Atlantic Futures, a Washington-based company that advises German corporations on American media issues.”
“There was also some criticism in some quarters that we were not leveraging a brand opportunity,” says Ryan. “That was the furthest thing from the top of our agenda.”
Wehmeier agrees. “I was very vocal internally that this was not the for us to be making this into a campaign to make Bayer look good. We didn’t want to say, ‘Look how great Bayer is.’ We wanted to do the right thing and do it in an appropriate way. We didn’t see this as a way to benefit commercially or in terms of our reputation.”
Still that article, and others questioning whether the company can meet increased demand, create concern at Bayer headquarters.
“We began to feel that things were slipping away from us,” says Wehmeier. “We had set out to concentrate on the supply question. Our people had done this beautifully. We had tried to communicate that on the 16th. We had run ads trying to reassure the American public. But the noise level in Washington was so high that our message was not always getting through.”
So the company decides to do two things. The first is to hold a second, “much more focused” news conference, confirming its discussions with the DHSS and repeating that the company “stands ready to fulfill the supply requirements of the federal government.”
The second is to call Tommy Thompson again. “I advised him that we were doing this news conference, because the situation was not getting any better for either of us,” says Wehmeier. But Wehmeier has an additional concern, which is that the failure to sign a contract with the government is being interpreted in some media quarters as if the two parties are haggling over the price. “Some critics were suggesting that Bayer was not being totally responsive to America at a time of one of its greatest crises,” says Wehmeier. “We felt we had to do something about that.”
Wehmeier tells Thompson that he and a team of senior Bayer executives is coming to Washington on Monday.

October 21  
The news that postal workers have contracted anthrax adds a new dimension to the public’s concern. Until now, the targets of the anthrax attacks have been either media figures or politicians, but now anthrax appears to be in the mail system, raising the possibility that letters delivered to ordinary citizens may be contaminated.
Meanwhile, Bayer issues a press release asking the public not to horde Cipro, and not to use it as a prophylactic. “We told people they should use Cirpo only when there is a real fear that they have been exposed,” Plischke says. “We also told people that there were other products they could be using, that they could treat anthrax exposure with doxycycline.”
The company also develops a handout for physicians and an ad that ran in several professional journals. Says Taufield, “Because of the lead time on most publications, we hand delivered a lot of the material through the sales force and posted the information to the Bayer website. The theme of the materials was the appropriate use of antibiotics to combat bioterrorism, and they made the case that taking antibiotics just in case there was a bioterrorism attack was inappropriate, and that the government had a stockpile for any emergency.”

October 22
“When we arrived in Washington, we didn’t have a single appointment,” says Wehmeier. “But we knew we needed to be there.”
The company had good contacts in Washington, including Tom Ridge, the former Pennsylvania governor who had been put in charge of homeland security, and Pennsylvania Senator Arlen Spector.
“We were told time and time again that the people who mattered understood the patent issue, understood the importance of research and development in the pharmaceutical issue,” says Wehmeier. “There was near unanimity, with the exception of one senator, that it was inappropriate to raise the patent issue if we could guarantee supply.
“We were told, ‘Property rights are sacrosanct in America.’ But we were also told that these were extraordinary times, and they expected Bayer to rise to the occasion.”
The company is also beginning to see some support for its position in the media. The Financial Times publishes an editorial suggesting that “western companies are guilty of double standards.” Having defended the inviolability of pharmaceutical patents in the developing world, the Times says, some governments are ready to override them at home as alarm about bioterrorism spreads.

Wehmeier admits he is frustrated that six days after telling Thompson there is enough Cipro to meet supply, the two men still have not met. “This was the first time I had dealt with the government on this scale, on an issue with such a high profile. With hindsight, I should have told Secretary Thompson after our first telephone call that I was coming to Washington that day. I should just have flown in and made myself available until he was able to meet with me.”
The delay is clearly fueling misperceptions. Some media stories suggest Bayer may not be able to meet demand for Cirpo, while others suggest the delay is due to haggling over price. But Bayer doesn’t feel it can respond.
“We didn’t want to deal with the secretary through the media,” says Wehmeier.
Ryan agrees: “It was not easy sticking to our straight path. There was a lot of pressure on us to say something, to speak to all the issues that were being discussed in the media, but we did not believe that would be appropriate. We didn’t want to get out ahead of the secretary in the media. And we didn’t want to be perceived as prescribing how much Cipro would be enough for the American public. That was a public health issue, not a corporate issue.”
October 23
Bayer decides to make a donation to postal workers in Washington, D.C. The company calls the Post Master General and offers two million tablets for postal workers who might be at risk.
Later in the day, Wehmeier and Plischke meet with Senator Spector and with Tom Ridge, while Mary Kuhn testifies at a Senate subcommittee hearing.
And finally, one week after Wehmeier’s first conversation with Thompson, the two men met, following an appropriations committee meeting that cleared the way for a financial agreement. Wehmeier confirmed that Bayer would be able to satisfy the government’s needs for Cipro. All questions of supply and safety were met; the only thing that remained to be settled was the price.
Says Wehmeier, “We made an offer of a dollar per tablet,” significantly lower than the $1.77 price tag for Cipro before September 11. “He said 95 cents. We said done. Then we shook hands. Once we met face to face, we had an agreement in principle in less than 10 minutes.” It’s ironic, given the perception in the media of a protracted negotiation over pricing, that the deal is done so quickly.
Not only is a deal sealed with the U.S. government, but the Canadian government decides to reinstate the company’s patent after Bayer makes it clear it can meet any demand.

October 24
Less than 24 hours after meeting with Thompson, Wehmeier has his contract, drawn up by DHSS lawyers in what everyone at the department says is record time.
An hour or so after the contract is signed, Bayer distributes a joint press release with the DHSS. The company quickly schedules one-on-one press interviews with major media, including the Washington Post, The New York Times, The Wall Street Journal and ADR German Radio.
“Now that we had things squared away with the government, we could start to rectify some of the misperceptions,” says Wehmeier.

October 25

“The circus tents have folded, at least from the time being,” says The Wall Street Journal, in an editorial headed “The Cirpo Circus,” one of many that will appear in major media over the next few days praising Bayer and castigating its critics. Says the Journal, “You’d think Bayer had spread the anthrax virus instead of selling a cure for it… What makes the Cipro circus doubly disturbing is that it seems to have been motivated by concerns over price and not supply.”
Despite the nastiness of some of the criticism his company has endured—the charge of war profiteering is a particularly ugly one—Ryan says that the media coverage was generally accurate.
“If this issue was a Rubik’s Cube, I don’t know how many sides it would have,” says Ryan. “But there were many sides and we had to answer questions about every side. There were times we felt certain issues were not well understood, but for the most part the coverage was fair.”

October 26  
Bayer and other members of the pharmaceutical industry’s bioterrorism task force meet with Tommy Thompson. Says Wehmeier, “If we lift our eyes beyond the current crisis, and look at what may need to be done in the future as part of the fight against bioterrorism, we want to be part of that fight. We believe our research can make an important and lasting contribution to that fight.”

October 30  
The New York Times profiles Helge Wehmeier, who responds to criticism that Bayer should simply have given Cipro away. TransAtlantic Futures president Richter, who has been critical of Bayer in several Times articles, weighs in again: “For a company that has spent eight decades on very touchy issues with medicines and expropriation, to then not seize the tremendous brand opportunity of offering those medicines for free is totally shocking.”
Wehmeier says that with anthrax scares spreading around the world, and with the federal government asking for ever-increasing quantities of Cipro, Bayer does not think it can set the precedent of giving away the antibiotic free. That’s especially true since Cipro accounted for about 10 percent of the company’s pharmaceutical income last year.
Taufield, meanwhile, puts the suggestion that Bayer should provide its products for free in context: “No one ever suggests that because we are at war, Northrup Grumman should build airplanes at half price.”

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