People without insurance
These are men and women who most stand to benefit from a generic version of Lipitor, for which they have been paying full price at the pharmacy. But they're unlikely to see their costs reduced much in the next six months.
During that time, the generic's price is expected to undercut Lipitor's by only about 10 to 20 percent, Schondelmeyer explains. And even if Pfizer brings down Lipitor's cost to the level of the generic, uninsured customers are unlikely to see much price difference. But starting June 1 other generic drugmakers can compete and their drugs are expected to lower the generic price dramatically. Lipitor now typically costs $5 to $6 per pill when not covered by insurance. "By next fall, the [generic] price will be down to about $2 a pill, and by 2013 it will probably be down to 50 or 25 cents," Schondelmeyer says.
Meanwhile, in another bid to encourage continued loyalty to the Lipitor brand, Pfizer is pitching discount cards for people not covered by private insurance or government programs — in some cases as low as $4 for a 30-day supply.
Setting a precedent?
Many blockbuster drugs are expected to lose patent protection (pdf) over the next 12 months, opening the way to lower-cost generics — among them Plavix (heart attack prevention), Avandia (diabetes), Singulaire (allergies and asthma) and Lexapro (depression). Could their manufacturers cut deals similar to Pfizer's?
"You have to wonder at the precedent [the Lipitor strategy] sets," says Joyce. "If Pfizer is successful, other manufacturers will follow some or all of these approaches."
Meanwhile, the Federal Trade Commission is said to be closely watching developments. Drug market analysts say FTC officials have been inquiring into the PBM deals over Lipitor. The agency declined to comment or say whether it is actively investigating the issue.
But in recent years the FTC has vigorously pursued other types of tactics to delay generic competition — in particular one called "pay for delay" in which a brand-name drugmaker pays a generic manufacturer to stay out of the market for several months. The FTC estimates that these deals currently protect at least $20 billion in sales of brand-name drugs from competition, and cost American consumers $3.5 billion a year, including about $1.2 billion paid by the federal government.
The AARP Bulletin contacted Pfizer for comment and was invited to email questions to the company. Pfizer did not respond to them.
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Patricia Barry is a senior editor of the AARP Bulletin who writes about Medicare and health policy issues.