December 8, 2011
The same day Pfizer’s Lipitor patent ended, the FDA approved the first generic Lipitor and still other approvals are in the pipeline.
This should mean the cost for this life-saving drug would go down. The generic version could cost as little as $5 per month compared to $115 – $187 per month for brand-name Lipitor.
Unfortunately for employers and insurers, Pfizer has made a strong commitment to retain its Lipitor market share.
Earlier this year, Pfizer began offering co-payment assistance to consumers. This program lowers the out-of-pocket cost to consumers to $4 per month – equivalent to a generic co-payment at Wal-Mart or Target – saving the consumers about $50 per month.
However, although the out-of-pocket cost to consumers is much lower, employers and insurers are still paying for the more expensive brand-name Lipitor instead of a generic version. Although Medicare and Massachusetts prohibit co-payment assistance, a recent report found that these programs could increase healthcare costs by $32 billion over the next decade.
Pfizer is also partnering with Diplomat Specialty Pharmacy to set up a mail-order pharmacy for Lipitor. Insurers that agree to use Diplomat and agree to pay only for brand-name Lipitor will pay about the same price they would pay for the generic version for the first 180 days. However, there is no word on what the cost will be at the end of the 180-day period.
That is a full six months to build Lipitor brand loyalty and secure market share.
Pfizer has also struck deals with insurers and pharmacy benefit managers that require pharmacies to reject prescriptions for low-cost generics and substitute a discounted name-brand Lipitor. Other deals would block generic manufacturers from the mail-order services that account for 40 percent of all Lipitor sales.
A stark example of the cost difference for generics and brand-name drugs comes from District Council 37, the union that represents public employees in New York City. In 2009, 59 percent of claims for cholesterol-lowering drugs were for brand-name medications and cost the union’s health plan $17.3 million. The remaining 41 percent of claims were for generic versions and only cost the plan $179,000.
Treatments for chronic conditions such as diabetes, high blood pressure, and high cholesterol account for more than 75 percent of the $2.5 trillion the U.S. spends on healthcare annually. With a number of prescription medications losing their patent protection in the next few years, Pfizer is paving the road for manufacturers to retain market share for their high-cost brand-name drugs.
This is a business strategy that is certain to keep healthcare costs higher for everyone.