As Lipitor Goes Off Patent, What Will Happen to Price of Your Prescription?

People in Medicare drug plans

The Medicare prescription drug program works very differently from employer plans. Part D plans cover an individual's drug costs up to a certain level each year ($2,840 in 2011). This limit is based on the full price of the drug — what individuals contribute in copays and what the plan pays — and when it is reached, the coverage gap known as the "doughnut hole" begins and enrollees' costs become much higher.

So if any Part D plans decide to cover Lipitor but not the generic, it could mean that people hit the doughnut hole a lot faster.

Part D plans either use pharmaceutical-benefit managers or negotiate directly with the drugmakers on price. By law, the drug plans generally are free to choose which drugs they cover, and are not required to pass on any rebates to their enrollees or to Medicare. In 2008 alone, Part D plan insurers received $6.5 billion in rebates from drugmakers, according to a March 2011 report from the inspector general of the Department of Health and Human Services. But, experts say, these rebates have generally helped keep premiums lower.

Marley of the pharmacist group says they are waiting to see what Part D plans do about Lipitor, but adds that there is a historical precedent. When the anti-heartburn pill Protonix lost its patent last year, some Part D plans blocked the generic and covered only the brand, he says, in "exactly the same scenario" as Lipitor. "In those cases, you had patients who were hitting the doughnut hole quicker and the federal government picking up the whole tab for low-income-subsidy patients."

Some Medicare drug plans have already taken action. For example, in 2012, nine of the 33 Part D plans in Florida will drop Lipitor to a generic pricing level, with copays from $0 to $8 for a 30-day supply, according to Medicare's website.

And CVS/Caremark advised pharmacists this week that generic atorvastatin would not be covered in 29 Part D plans for which the company manages benefits.  Instead, enrollees will get brand Lipitor at the generic copay price.

Next: Costs for people without insurance. >>