Until recently, Swiss drug maker Roche’s sales of Tamiflu were doing dismally. (Roche makes the drug on license from the patent holder, the San Francisco-based company Gilead.)

In 2001, sales of Tamiflu, an anti-viral intended to alleviate the flu, were $76 million. Health advocates criticized the drug as offering few benefits, and encouraged people concerned about the flu to instead get a flu shot.

Then along came avian influenza, and the threat of an outbreak of bird flu among humans. There is no available vaccine for bird flu, and Tamiflu appears to be the best available pharmaceutical defense for those exposed to the disease.

For now, avian flu is not communicative among humans. More than 150 people have been infected with bird flu since 2003, when the first bird-to-human transmission was recorded, and more than half of those infected have died.

Many public health experts believe that an outbreak among humans is virtually inevitable.

An outbreak could have extremely dire consequences. In the United States, the Centers for Disease Control reports that, a “‘medium-level’ pandemic could cause 89,000 to 207,000 deaths, 314,000 to 734,000 hospitalizations, 18 to 42 million outpatient visits, and another 20 to 47 million people being sick. Between 15 percent and 35 percent of the U.S. population could be affected by an influenza pandemic, and the economic impact could range between $71.3 and $166.5 billion.” The illness and death toll would be much worse in developing countries.

Slowly, the message has begun to penetrate government officials’ and the public’s consciousness, and governments are, very belatedly, looking to stockpile Tamiflu in advance of a potential outbreak.

That has provided a windfall for Roche. 2005 sales of Tamiflu are expected to top $1 billion.

It has also created a bit of a problem for Roche, because it cannot make enough Tamiflu to meet demand.

Given the public health urgency of stockpiling the drug, Roche could have simply announced that it would license other companies to manufacture it, conditioned on payment of a reasonable royalty.

Instead, it chose a different course.

With no prospect of the company satisfying growing demand, it announced that it would not license others to produce the medicine. Nor could others easily make the drug, the company claimed. It said that the manufacturing process was extremely complicated and dangerous, and that the key ingredient to make the drug was in short supply.

As it turned out, all of these claims turned out to be deeply misleading, or worse.

As late as October 13, Roche insisted that it would not license the product to competitors, and that it was too complicated for them to make. These claims deterred officials at the World Health Organization from pushing for compulsory licenses enabling competitors to manufacture Tamiflu. (“There will be no way in the next two years a company would be able to produce generic Tamiflu,” the head of WHO’s influenza program said on October 6.)

Roche “fully intends to remain the sole manufacturer of Tamiflu,’’ company spokesperson Terry Hurley told reporters. He said that the company would not reveal production figures, on the grounds that such information was “commercially sensitive.” All drug makers are able to track other manufacturers’ sales through commercial databases — but the information is not made available to public officials. Hurley also offered the company line on the complexity of making the drug. Manufacturing Tamiflu involves 10 complicated steps, and would take two-to-three years for a new entrant, he alleged.

But October 13 would be the last day Roche could make these claims.

On October 14, the New York Times reported that the Indian drug maker Cipla had reverse-engineered the drug two weeks earlier, and would have small commercial quantities available by early 2006.

With the spread of bird flu being reported daily, countries in Southeast Asia, where the epidemic among birds originated, started clamoring for the right to acquire greater quantities of Tamiflu. Following Cipla’s announcement, many other firms soon said they could produce the drug as well.

Taiwan’s National Health Research Institutes announced it had figured out how to synthesize Tamiflu in September — in 18 days.

In Thailand, the Government Pharmaceutical Organization announced in November that it had capacity to manufacture 1 million Tamiflu tablets in 10 days.

Roche’s claim that making Tamiflu involved a dangerous and potentially explosive step also was revealed to be an exaggeration. Reported the Wall Street Journal: “that step — which involves a chemical reaction with sodium azide, whose explosive potential has made it the common choice in automobile air bags — turns out to be relatively routine, according to some pharmaceutical executives and scientists familiar with the chemistry. Although it is still dangerous, the process is well within the abilities of university chemistry labs, let alone the world’s top generic-drug makers, these scientists say.”

The shortage of a key ingredient in Tamiflu also proved a chimera. The drug is made with shikimic acid, which is found in the Chinese plant star anise (used as a spice in Chinese cooking). The limited supply of star anise placed a constraint on how much Tamiflu could be made, Roche had claimed. But it turns out that a Michigan State University professor had developed a technique to make shikimic acid without star anise — and that Roche had been using the technique under license for years.

With it increasingly plain that dozens of generic companies were capable of manufacturing Tamiflu, Southeast Asian countries were prepared to issue compulsory licenses to enable new manufacturers to start making the product.

With its posture of “fully intend[ing] to remain the sole manufacturer of Tamiflu” no longer tenable, Roche announced it would license other companies to make the drug. In December, it said it would enter intense negotiations with a dozen firms.

Many countries, it turned out, did not need to seek a license from Roche, compulsory or otherwise. As countries began moves to authorize generic competition by issuing compulsory licenses, Roche explained that Tamiflu was not patented in those countries. The governments themselves did not know what was patented, and Roche had conveniently let them operate under misperceptions that patents had been granted. This occurred in the Philippines and Indonesia, among other countries.

While production is expanded — and in addition to the generic entrance into the market, Roche has announced it has increased its manufacturing capacity 10 times over — there remains a shortfall to meet the stockpiling standard urged by many public health officials. The U.S. stockpile, for example, is sufficient to provide medications to less than 2 percent of people in the United States — about a tenth the coverage recommended by public health officials.

“Roche has had plenty of time to figure out what its options are regarding the licensing of the patents,” says James Love, director of the Washington, D.C.-based Consumer Project on Technology. “There are too many potential suppliers to undertake individual negotiations with each company. Roche needs to simply identify the relevant terms it will impose on generic suppliers and offer open licenses to anyone who can comply.”

If Roche refuses such an approach, says Love, “governments should issue the appropriate compulsory licenses in order to assure the competitive generics sector they can legally sell generic copies of the drug.”