A new study published in the New England Journal of Medicine examines the economic impact and potential precedent set by the delay in lipid-lowering drug Lipitor becoming available in generic form.
Lipitor was the top-selling prescription medication in the U.S. in 2010, earning its manufacturer Pfizer more than $7 billion in total revenue, according to the study “Generic Atorvastatin and Health Care Costs.” The article’s lead author is WesternU College of Pharmacy Associate Professor Cynthia Jackevicius, BScPhm, MSc, PharmD, FCSHP, BCPS (AQ Card). Co-author Mindy Chou, PharmD ’11, is a College of Pharmacy alumna who worked with Jackevicius during her advanced elective rotation.
Lipitor’s patent expired in June 2011, but Pfizer made an agreement with Ranbaxy, the first company to develop a generic atorvastatin, to defer the first generic’s introduction into the U.S. market from June to November. This five-month delay cost Americans an estimated $324 million in savings.
This cost estimate is very conservative since in the first five months of a first generic, the product price usually only drops by about 20 percent, Jackevicius said.
Although generic-substitution laws and tiered formularies have been deployed for years in attempts to promote the use of generic products, patients’ and physicians’ preference for brand-name medications persists, according to the study. Examination of primary care prescribing patterns with regard to statins alone reveals that such preferences may result in $5.8 billion in excess expenditures annually.
Pfizer has employed aggressive business tactics to retain Lipitor revenue, including strategic agreements with several prominent pharmacy-benefits management and insurance companies to provide Lipitor at less than the cost of the first generic atorvastatin, with a generic-level copayment for patients, in exchange for a monopoly on dispensed atorvastatin prescriptions, according to the study.
The tactics employed by Pfizer are much broader and all-encompassing that what has been done previously to try to maintain market share, Jackevicius said.
“Because of Pfizer’s aggressive tactics, other companies with patents about to expire may mimic their actions if they prove to be successful,” Jackevicius said. “There is concern that some of these tactics may delay other generic companies from making a generic product if they don’t think they will get much market share after the first six months of exclusivity with the first generic.”
In the short term, a consumer may not be negatively impacted financially, especially if they get the brand name product at less than the generic price. Then this is really a win-win. The questions arise in terms of whether there will be enough generic competition in the long term to promote enough competition, Jackevicius said.
“Usually about six or seven generic products are needed after the first six months to drive the generic product price down to about 20-30 percent of the generic, the usual price at that time with that many generics available,” Jackevicius said. “The other concern is, who gets the savings from the agreements with Pfizer to keep using brand name Lipitor? Does the pharmacy benefits management company or insurance company give the savings back to the employer, or do they keep these savings for themselves? If the employer is still having to pay the higher Lipitor price, then the costs to the employer, and indirectly to the employee, for the health care plan is not reduced. It is uncertain, according to the current agreements that Pfizer has, who retains the savings.”
Whatever happens, Lipitor’s generic transition should be watched closely, since Pfizer’s strategies may set a new precedent for the other blockbuster drugs on the verge of losing their patents, the study concluded. Click here to view the article.