The biggest introduction of a generic drug in pharmaceutical history is being met with tough business strategies by Pfizer and pharmacy benefit companies, according to recent letters to pharmacists.
Many drugstores are being asked to block prescriptions for a generic version of Pfizer’s Lipitor starting Dec. 1, when the company loses its patent for the blockbuster cholesterol drug and generic competition begins.
Medco Health Solutions, among the nation’s largest pharmacy benefit managers, is one of the companies issuing instructions, seeking to have pharmacists keep filling prescriptions with the more expensive Lipitor for six months.
Pfizer has agreed to large discounts for benefit managers that block the use of generic versions of Lipitor, according to a letter from Catalyst Rx, a benefit manager for 18 million people in the United States. The letters have not previously been made public.
A pharmacy group and an independent expert say the tactic will benefit Pfizer and benefit managers at the expense of employers and taxpayers, who may end up paying more than they should for the drug.
Pharmacy benefit managers are middlemen between drug companies (the sellers) and insurers and employers that sponsor insurance plans (the buyers).
“I’m stunned,” said Geoffrey F. Joyce, an associate professor of pharmaceutical economics and a health policy expert at the University of Southern California, after reviewing the letters. “This is just an egregious case. Clearly there’s been some negotiation between Pfizer and the large P.B.M.’s saying we’re going to make this cost-beneficial to them, but the plan sponsors are going to eat it.”
As for the people who actually take Lipitor, after Nov. 30, they will typically see their co-payment for a 30-day supply drop to the $10 level of the generic substitute, according to one of the pharmacy letters. The co-payment for Lipitor now is often $25 or more.
When patients submit a prescription for a generic version of Lipitor, though, they are to be given Lipitor instead.
Lipitor is the best-selling drug ever, accounting for $106 billion sales over the last decade, or almost one-quarter of Pfizer’s total. Pfizer has told analysts it is preparing for the loss of Lipitor’s patent with a variety of business moves to preserve market share.
Two generic drug makers are set to compete starting Dec. 1. Watson Pharmaceuticals is making a generic version authorized by Pfizer under a profit-sharing agreement. Pending federal approval, Ranbaxy Laboratories of India also plans to sell a generic version. When a drug’s patent protection expires, the law permits only limited generic competition in the first six months.
After May 31, other generic versions of Lipitor are expected to flood the market, lowering prices sharply. Then, according to the letter from Catalyst Rx, the generic block lifts, Lipitor’s co-payment rises and drugstores are told to fill Lipitor prescriptions with the cheaper generic versions.
Objections to the deal were raised publicly on Thursday in a news release from a group called Pharmacists United for Truth and Transparency, which opposes some tactics of pharmacy benefit managers. The statement called the move “a blatant attempt” by benefit managers to keep Pfizer’s discount while employers still have to pay the full price of the brand-name drug.
David Marley, an independent pharmacist in Winston-Salem, N.C., and spokesman for the group, said the benefit companies and Pfizer would profit at a cost to employers, the government and health care overall.
“That’s why this is unique: We’re talking about blocking a truly less expensive drug, which is why the employers have got to be on top of this,” Mr. Marley said. “This is the most aggressive I’ve seen where they are trusting the employer is not going to figure out the whole game.”
Paul M. Bisaro, chief executive of Watson, said the Pfizer discounts would undercut its generic price and raise overall health care costs while enriching pharmacy benefit managers.
“It’s not a good event,” he said in an interview. “And consumers are going to be confused. They’re not going to understand why they can’t get a generic.”
Raymond F. Kerins, a Pfizer vice president and spokesman, issued a statement saying Pfizer was committed to supporting patients’ continued access to Lipitor. He declined to answer further questions Friday afternoon.
In another statement, Melissa Mackey, manager of public affairs for Medco, said its letter described “a custom plan design, which is not a new concept,” in which clients could “tailor their formulary to maximize value.” Asked in an e-mail specifically whether Medco would pocket the Pfizer discounts while employers and taxpayers paid more than the generic price for brand-name Lipitor, Ms. Mackey declined further comment.
James H. Golden, a spokesman for Catalyst Rx, said in a statement: “As patents expire and generic forms of medications become available, Catalyst evaluates the market on a case-by-case basis to determine the appropriate measures to drive the lowest cost for our clients.”Article originally appeared in NY Times on 11/13/2011