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

En español | The first generic version of the world's top-selling drug, the cholesterol-lowering Lipitor, is due to come on the market Dec. 1.

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Drug market analysts have long speculated on the strategies Lipitor's manufacturer, Pfizer, might use to hold on to at least some of the profits for a blockbuster drug that has earned up to $12 billion a year over the past 15 years. But even experts were taken aback by the scale and ingenuity of the Pfizer counter-attack against generic competition. The drugmaker has launched an unprecedented campaign to persuade patients to stay with Lipitor instead of switching to the generic, atorvastatin.

Many blockbuster drugs are expected to lose patent protection over the next 12 months. — Image by R.O. Blechman

Typically, after a brand-name drug loses its patent, one other manufacturer gets six months to market a lower-cost generic copy exclusively — and prices it not far below the brand. After six months, other generic copies enter the market and prices plunge. Consequently, demand for the brand-name drug usually plunges, too. But Pfizer is trying to rewrite that playbook and keep Lipitor competitive — especially by making deals to block coverage of the new generic in some health plans.

That strategy was revealed in mid-November when three large pharmaceutical benefits management companies (PBMs), which act as middlemen negotiating prices between the drugmakers and insurance companies, told pharmacists that, from Dec. 1 through May 31, many of the health insurance plans they represent will cover brand-name Lipitor but not its generic.

"I was stunned," says Geoffrey Joyce, associate professor of pharmaceutical economics and policy at the University of Southern California. "I knew that Pfizer would be looking at ways to discourage consumers from using the generic. But blocking it completely seems like collusion between the manufacturer and large PBMs to prohibit a lower-cost drug."

Among other Pfizer strategies: setting up its own mail order pharmacy to sell Lipitor at generic prices to people in health insurance plans; offering discount cards to uninsured people; and launching a massive advertising campaign to promote brand loyalty, with the pitch: "If Lipitor is working for you, why switch?"

"This is not the first attempt by a manufacturer to extend the use and profitability of a brand drug past its patent expiration," says Joyce. "But clearly it's the most aggressive and multifaceted effort to date." The long-term strategy, he adds, is to get patients accustomed to using Lipitor "despite the availability of a generic."

How do such deals affect consumers? It depends on whether you're covered by an employer plan, or other private insurance plan, by a Medicare Part D drug plan, or you're not insured at all.

Next: Costs for people in private plans. >>