Pfizer is under the gun for tactics designed to retain some of its market share after its blockbuster drug, Lipitor, came off patent. In an interview with Cardiovascular Business, a co-author of a perspective published online Dec. 7 in the New England Journal of Medicine discussed how Pfizer’s strategy could affect atorvastatin pricing and the greater generic market.
Earlier this year, Pfizer’s patent on its statin expired, opening the market for generic atorvastatin. That switch could save $4.5 billion annually by 2014, Cynthia A. Jackevicius, PharmD, of Western University of Health Sciences in Pomona, Calif., and colleagues wrote. Add aging of the patient population into the equation and projected healthcare cost savings could be bumped up by another $10 million in 2012, $20 million in 2013 and $30 million in 2014.
And those figures are conservative estimates, Jackevicius said during an interview.
But Pfizer isn't sitting back passively. Instead it developed a multi-pronged strategy to leverage its brand-name recognition and loyalty among patients and physicians during the legally mandated six-month exclusivity period. The strategy includes deals with insurers and pharmacy benefits managers to provide Lipitor at below generic costs, a $4 co-payment card for direct sales and an agreement with Watson Pharmaceuticals to sell the drug at entry-level generic prices for a cut of sales.
“Some pharmaceuticals have a generic arm or partner with a generic company and get a portion of the sales,” Jackevicius said, but usually big pharma keeps a lower profile. “What's unique in this situation is the aggressiveness. They were aggressive about deals upfront and then pricing it slightly below the generics so it couldn't be interchanged for the generic product.”
As Pfizer’s top selling drug, Lipitor captured about $10 billion annually in sales. Jackevicius and colleagues reported that Pfizer’s share of the statin market had been falling, though, from 44 percent in 2006 to 21 percent today.
They noted that the generic atorvastatin may have a leg up on high-dose simvastatin because it poses no risk of myopathy. Based on historical trends for simvastatin, they calculated that the price of atorvastatin should come in about 20 percent lower than Lipitor at market entry and drop further after the six-month exclusivity period lifts and any manufacturer that meets federal standards can compete.
Having Pfizer as a player in the statin market is in itself not a problem, Jackevicius said, as long as prices fall. “It seems like a reasonable business strategy to retain some of the market share as opposed to none,” she said.
But there are concerns that Pfizer’s strategy is meant to squeeze out generic competitors, she noted, by underpricing them early on. “If there is this disincentive for generics, then there might not be enough generics competing. We know there needs to be at least five or seven generics to create enough competition to lower the price in the generic market to about 20 to 30 percent of the branded product, which is what it usually comes down to eventually. “
To demonstrate the potential savings to the healthcare system, the authors turned to the real-world example of Ranbaxy Laboratories, a company that was to bring the first generic atorvastatin to market in June. Its failure to meet FDA quality standards resulted in a five-month delay and a chance for the U.S. to save $324 million on statin expenditures, the authors wrote.
Observers are concerned that other brand-name pharmaceutical companies may follow Pfizer’s game plan and potentially make the generic industry so financially unattractive that it deters competition, which then could affect access and pricing. Pfizer’s practices already are being scrutinized by lawmakers. Sens. Max Baucus, D-Mont., chairman of the Finance Committee, Herb Kohl, D-Wis., chairman of the Special Committee on Aging and Charles Grassley, R-Iowa, have sent letters to Pfizer questioning its Lipitor initiative.
The next six months will be closely watched by the healthcare community, Jackevicius proposed. “Prescribing clinicians and patients are wondering what will happen after the first six months,” she said. “They don’t have a lot of choice at the current time.”