Chances are, you know someone who is taking a cholesterol lowering drug. If you do, there's a good chance that the drug he or she is taking is Lipitor, the most widely prescribed brand-name prescription drug of its type. That certainly was the case through Wednesday.
Today, the picture has changed somewhat. Pfizer, the pharmaceutical giant that produces Lipitor, lost patent protection on the drug yesterday, Typically, when a blockbuster drug like Lipitor loses such protection, generic versions quickly erode demand for the brand-name product, sharply reducing profits for the manufacturer. That's what has happened in the past.
No one is sure if that scenario will play out with Lipitor. Pfizer has taken steps to protect its market share against generics. The company has sound reasons to do so. Lipitor, the best-selling drug in history, is used by almost 10 million Americans and last year generated more than $10 billion a year in sales. Financial analysts report that Lipitor has produced about a quarter of Pfizer's revenue in the last 10 years.
Pfizer wants to keep that revenue stream, or a substantial part of it, flowing despite the availability of a generic -- sold as atorvastatin, its chemical name. To that end, the company has initiated an ambitious pricing program to convince individuals, public and private insurers and pharmacy benefit managers, to continue to choose Lipitor over its generic competition.
The incentives -- discount cards for individuals and deals with insurers, benefits managers and some Medicare prescription drug plans -- essentially will make Lipitor available at the same price or slightly less than generics, which often sell for $3-to-$10 a month. The savings will be substantial, up to hundreds of dollars a year for Lipitor users.
The strategy is simple. For the first six months after a drug loses patent protection, generic competition is limited and there usually is little decline in price as the generic manufacturers recover start-up costs. After six months, any company can produce generics. Pfizer clearly hopes its Lipitor strategy will extend its primacy in the marketplace for those six months. It has millions to gain if people continue to ask for Lipitor by name rather than accept a generic product.
What's good for Pfizer, though, might not be good for the public. In the short term, those who continue to take Lipitor will save money. No one is sure, though, if those savings will last beyond six months or if the company's new strategy will prompt detrimental changes to a system that currently delivers inexpensive generic drugs to the marketplace once patents expire. That pipeline has saved billions in health care costs, and it should be protected.
Consumers, public and private agencies and watchdog groups will have to monitor Pfizer's experiment closely. Ultimately, they'll have to protect the public's long-term interest in the manufacture and pricing of prescription drugs. Pfizer and other pharmaceutical companies have proved time and time again that they can't be trusted to do so.