Lipitor Already Cheaper After Patent Expiration

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Matt Rourke / AP

Lipitor's patent protection ended on Wednesday.

Drug prices almost always fall after a manufacturer’s patent expires and generics hit the market. But with its blockbuster cholesterol-fighting drug Lipitor going off-patent this week, drug maker Pfizer has launched an all-out price war against generics manufacturers to hang onto market share. In fact, you can now buy Lipitor for about 80% off its original cost.

Lipitor is the best-selling drug of all-time. Pfizer’s sales from Lipitor have averaged about $11 billion a year — roughly one-sixth of Pfizer’s total sales — and last year peaked at a staggering $13 billion. So it’s no wonder that Pfizer has an exhaustive plan to keep that lifeblood flowing to ensure that the 10 million or so patients currently on Lipitor stay on it.

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According to the Associated Press, Pfizer is negotiating with insurance providers to block pharmacies from dispensing a generic Lipitor product; offering insured patients a discount card that will allow them to purchase Lipitor for $4 a month (lower than the $25 average copay for a brand-name drug); paying pharmacies to mail patients that $4 copay card; and continuing, for now, its massive Lipitor marketing campaign.

“Pfizer is the best marketing pharmaceutical company in the world,” says Dr. John Santa, director of Consumer Reports’ Health Rating Center. “It’s a master at marketing drugs. It should not be surprising that they’re going to try some interesting things to squeeze out all the value from that brand.”

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It’s an unprecedented move, in fact, one that may herald a new era in how big pharma reacts to generics. “They would not do this if they did not have a strategy to make money,” says Dr. Santa.

Some estimates project that Pfizer will still be able to make a profit of about $100 from each 90-day supply of Lipitor, compared with the $225 it made before the market opened up to generics this week. One way profits could stay high for Pfizer is if the manufacturer scales back its marketing campaign. Dr. Santa says this is typical, with most drug makers eventually ceasing marketing a product after the generic versions are released. But as of Thursday, Lipitor was still airing TV ads.

As patent protection expired on Wednesday, two generics became available: one made by Ranbaxy Laboratories and the other by Watson Pharmaceuticals. But for the next six months, those generics won’t be significantly cheaper than Lipitor, if at all.

According to Bloomberg, Pfizer has struck deals with Catalyst Health Insurance Inc. and Coventry Health Care Inc. to prevent generic versions of Lipitor from getting into customers’ hands until next summer. And deals Pfizer has made with health care companies will keep Lipitor at a much lower price for at least the next six months.

Besides Pfizer’s $4 co-pay offer for some insured patients, Lipitor will be a bit less expensive than generics for consumers who have United Healthcare; but for other insurance companies like WellPoint, Lipitor will still have a higher co-pay — $20 to $35 compared with $10 to $15 for the generic.

“We will be disappointed in the competitive market process that is supposed to ensue if in 18 to 24 months, you can’t get this drug at Costco for $4 a month,” says Dr. Santa. “If we’re not down to $4 a month then, the system has failed.”

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