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Generic Drug Savings Not Always Immediate

Wednesday January 25, 2012
On November 30th Lipitor became available as a generic drug. As one of the biggest blockbuster drugs of all times, Lipitor's availability as a generic has received considerable media attention. Because differing media writer opinions, having varying levels of expertise in the complex drug industry, the message of what's happened and what the best course of action may be for plan sponsors might be unclear.

Atorvastatin became available to the pharmacy world on Wednesday, November 30th from generic manufacturer, Ranbaxy. As the first generic manufacturer to file an abbreviated New Drug Application (aNDA), Ranbaxy is granted 180 days exclusivity for marketing atorvastatin. Due to this exclusivity, Ranbaxy has an opportunity to recoup their investment by lowering their price nominally from the brand name drug. When other manufacturers enter the market six months from now, competition will completely erode the pricing to pennies per unit. But for now, pricing will not deteriorate without further generic competition.

Additionally, in an increasingly popular move by brand manufacturers, Pfizer chose to license an authorized generic. This essentially means that Pfizer sold the exact "recipe" of their brand to another firm, in this case, Watson Pharmaceuticals. Because this "authorized generic" is the exact same formulation as the brand, it can be sold during the 180-day exclusivity period.

Of course, Pfizer can still market branded Lipitor and is, in fact, doing so with a vengeance. Most branded manufacturers do little to market their branded product at this stage of the game. But Pfizer has bucked conventional wisdom and focused even greater resources on:

  • Direct-to-Consumer (DTC) advertising

  • $4 copay cards for patients (to compete with generic)

  • Aggressive PBM contracting strategies (to "block" generic coverage)

  • Continuing to sample physician offices at rates similar to last year


So with all of this activity surrounding one product, here is an overview of what's presently available in the market:
NameManufacturerClassification
LipitorPfizerBrand
atorvastatin RanbaxyGeneric
atorvastatin WatsonGeneric


For those PBM's and health insurers who have Lipitor (the brand name drug) currently in a preferred status, it is probably in your best interest to maintain this status. The rebates available from Pfizer and the relatively small discount on the available generic price make the cost of branded Lipitor lower for plan sponsors.

Of course, some members will be anxious to start receiving lower copays for generics. But if plans place the generic in a preferred spot, they will sacrifice the present quarter's rebates form Pfizer. If all goes as scheduled, further generic competition will come in May of 2012. History shows that it won't take long at all for the price to plummet. The prudent advise at this point seems for plans to maximize their rebates in the first quarter by keeping Lipitor in a preferred brand status. However, they will want to prepare and begin pushing communications for an April 1st conversion to atorvastatin.

Each plan will need to partner with their PBM and their consultant to make a strategic decision as to when the best time is to move preferred products in this class. With this class and this product both ranking among every plan's highest used and most expensive drugs, it is definitely a topic to address with priority and manage closely.
 

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