Today, nearly 80 percent of all prescriptions in the U.S. are filled with generics, and the percentage will rise when more than 10 major drugs go off patent in 2012. Late last month, the most popular drug in history, Lipitor, went off patent, allowing a generic version of the cholesterol-lowering drug to enter the market and be sold at lower prices.
Pfizer has developed a novel program that lets people stay on Lipitor, even as more competitors prepare to enter the market. Patients can sign up to get a $4 co-pay card that will allow them to get their prescription filled at generic prices through the company’s new program, “Lipitor For You.” They can have their prescription filled at a local participating pharmacy, or they can get the medicine delivered by mail.
“They are setting up a Pfizer pharmacy, if you will,” said Everett Neville, vice president of pharmaceutical strategy and contracting at Express Scripts., one of the nation’s biggest pharmacy benefit managers. That is something that no pharmaceutical company “has done to date,” he said.
In the U.S., the company is offering to sell Lipitor at generic prices to health plans and to pharmacies and pharmaceutical distributors who agree to fill prescriptions with its product instead of an unbranded version.
The effort is part of a broader push by Pfizer to keep patients on the brand-name drug. The blockbuster medicine generated tens of billions of dollars in revenue for Pfizer over its patent life, boosting resources available to invest in research into the next generation of new drugs.
Generic companies are allowed to sell copies of brand-name drugs once the patent expires. The Federal Hatch-Waxman Act, passed in 1984, allows a ramp-up to this generic competition in the first 180 days after a drug patent expires; during this time, competition is limited to the company that is “first to file” an application to sell the generic version of the drug.
This provides only a six-month reprieve. Pfizer will reassess the program once more competitors enter the market next year.
“Previously, Big Pharma has tended to walk away” from top-selling drugs once they lose patent protection, Pfizer Chief Executive Ian Read said in an interview. “Now, we have a flat-out different culture.”
Medco Health Solutions Inc., which manages the benefits for 60 million Americans, says it plans to sell brand-name Lipitor at generic prices to the million-plus customers in its mail-order program. Another pharmacy benefit manager, Catalyst Rx, has told pharmacists that brand-name Lipitor will function as the generic during the next six months, with a generic’s $10 co-pay.
All generic versions of the drug must contain the same active ingredients as the original formulation, but that doesn’t mean it will work the same in every patient.
Different drugs with the same active ingredient do work differently for different patients, as everyone who has taken maintenance drugs knows. This gives patients a chance to stay on Lipitor if that works best for them without being automatically switched to a generic. Patients also value the certainty of having a brand-name drug and the supply-chain integrity the company provides.
Seems like an attractive deal for many patients. Pfizer’s deal is a little like GM telling people they can have a Cadillac at Chevy prices.
With the growing difficulty of getting drugs through the FDA labyrinth and the rising cost of drug approval, Pfizer musts produce revenue for continued research – the lifeblood of pharmaceutical companies. Without this research, the pipeline would run dry, delaying or even killing new medicines for Alzheimer’s, Parkinson’s, and countless other diseases.
It now costs about $1.8 billion to bring a new drug to market, and only a fraction of the drugs that are approved actually recoup the investment. According to a recent McKinsey study, unless pharmaceutical companies can develop creative ways to generate revenue to fund research, “we would expect Big Pharma’s current level of R&D spending to become a luxury that investors no longer tolerate. We already see these signs today, as some investors and analysts believe that many of Big Pharma’s R&D investments destroy value.”
That would be bad news for today’s and especially tomorrow’s patients.
Posted on Forbes.com, December 12, 2011.