Pfizer seems to be desperate to extract as much additional profit as possible from its blockbuster drug Lipitor. The drug is coming off patent and can soon be manufactured as a generic.The company's first strategy was to pay the generic drug manufacturers not to produce the drug -- a "pay for delay" strategy (see: Pfizer’s Latest Twist on ‘Pay for Delay’). It has now come up with a new twist on this delaying strategy. It has cut a deal with the pharmacy benefit managers (PBMs) to force pharmacists to keep filling prescriptions with the more expensive Lipitor for six months when the generic version is ordered by physicians (see: Plan Would Delay Sales of Generic for Lipitor), Here is an excerpt from the article:
Pfizer has agreed to large discounts for benefit managers [such as Medco Health Solutions] that block the use of generic versions of Lipitor, according to a letter from Catalyst Rx, a benefit manager for 18 million people in the United States. The letters have not previously been made public. A pharmacy group and an independent expert say the tactic will benefit Pfizer and benefit managers at the expense of employers and taxpayers, who may end up paying more than they should for the drug....“I’m stunned,” said ... a health policy expert at the University of Southern California, after reviewing the letters. “This is just an egregious case. Clearly there’s been some negotiation between Pfizer and the large P.B.M.’s saying we’re going to make this cost-beneficial to them, but the plan sponsors are going to eat it.” As for the people who actually take Lipitor, after Nov. 30, they will typically see their co-payment for a 30-day supply drop to the $10 level of the generic substitute, according to one of the pharmacy letters. The co-payment for Lipitor now is often $25 or more. When patients submit a prescription for a generic version of Lipitor, though, they are to be given Lipitor instead....Two generic drug makers are set to compete starting Dec. 1. Watson Pharmaceuticals is making a generic version authorized by Pfizer under a profit-sharing agreement. Pending federal approval, Ranbaxy Laboratories of India also plans to sell a generic version. When a drug’s patent protection expires, the law permits only limited generic competition in the first six months. After May 31, other generic versions of Lipitor are expected to flood the market, lowering prices sharply. Then, according to the letter from Catalyst Rx, the generic block lifts, Lipitor’s co-payment rises, and drugstores are told to fill Lipitor prescriptions with the cheaper generic versions....Paul M. Bisaro, chief executive of Watson, said the Pfizer discounts would undercut its generic price and raise overall health care costs while enriching pharmacy benefit managers.
It seems to me that Pfizer is opting for a short-term gain by cooking-up this deal with the PBMs. As noted above, this is at the expense of the employers who offer health insurance plans and the patients who are forced to cough up a higher co-payment. The company clearly has little concern for its long-term reputation among these latter groups. Here's an additional insight about the relationship between Pfizer and Ranbaxy (see: Pharmacies accuse Pfizer, Ranbaxy of secret Lipitor deal):
There's no question Pfizer reaps major benefits for every extra month without generic rivals for Lipitor. The [California] pharmacies say in their lawsuit [against Pfizer and Ranbaxy], Pfizer eked out an extra $18 billion through its patent settlement with Ranbaxy. That 2008 settlement gave Ranbaxy that Nov. 30 launch date, and with first-to-file status, Ranbaxy would have 6 months as the only independent generic rival to the best-selling cholesterol drug. Watson Pharmaceuticals...has the right to sell an authorized generic version.