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More Despicable Drug-Industry Behavior

December 2011

Sidney M. Wolfe, M.D.

If you are a drug company that sells an important and effective drug — the best-selling drug ever, having brought in $106 billion in sales over the last decade, according to The New York Times — what do you do when the patent expires on Dec. 1 of this year and a much lower-priced, generic version becomes available?

If the company is Pfizer and the drug is Lipitor (generic name: atorvastatin), you make a deal with the biggest pharmacy benefit management (PBM) company in the world, Medco. PBMs act as middlemen between drug companies selling their drugs and insurers and employers sponsoring insurance plans that purchase the drugs. Because of the Pfizer-PBM deal, starting Dec. 1, when generic atorvastatin becomes available in drug stores, patients whose drug benefits are managed by Medco will not be able to purchase the generic version but will be forced to get Lipitor, although their doctors have written a prescription for generic atorvastatin.

Even if this “deal” only lasts for six months, after which many more generic companies will be allowed to flood the market with their versions of atorvastatin, Pfizer will reap an additional $700 million in 2012 alone, compared to what they would have made if such a deal had not been sealed, according to Wall Street drug-company analyst Dr. Tim Anderson. This is because it will significantly slow the pace of the ultimate switch to the generic version.

Who benefits from this? Clearly, Pfizer and probably PBMs such as Medco, although Medco has denied it will profit from the deal. Who loses? Although patients will, at least temporarily, be able to pay the same deductible for Lipitor as they do for the generic version, some employers and insurance companies will dish out more money for the needlessly expensive Lipitor instead of being able to pay for less expensive generic atorvastatin.

”The move is a blatant attempt by PBMs to retain rebate dollars from Lipitor’s manufacturer,” David Marley of Pharmacists United for Truth and Transparency said in that group’s statement on the Pfizer-PBM deal. “While the Lipitor co-pay will drop on November 30 [to the same as the generic co-pay], the full price to plan sponsors will stay the same. That means plan sponsors will be forced to pay more for brand Lipitor, even though a low cost generic is available.”

Note that plan sponsors include employers and Medicare Part D, which means taxpayers absorb the higher cost as well.

“This is just an egregious case. Clearly, there’s been some negotiation between Pfizer and the large PBM’s saying we’re going to make this cost-beneficial to them, but the plan sponsors are going to eat it,” Geoffrey F. Joyce, an associate professor of clinical pharmacy and pharmaceutical economics and policy at the University of Southern California, told The New York Times.

This newest version of pay-for-delay (bribing PBMs) comes on the heels of the still-popular older version, wherein brand-name companies legally “bribe” generic companies to hold off introducing their drugs for a certain period of time after a drug’s patent expires. Brand-name companies pay generic companies tens of millions of dollars for this profitable delay. Legislation making this behavior illegal in most instances is stalled because of the overwhelming presence of drug-industry lobbyists and campaign contributions from the industry here in the nation’s capital of influence-peddling.

This is not the only desperate, aggressive tactic Pfizer is using to preserve as many Lipitor sales as possible. As most people reading U.S. newspapers have learned, for nearly a year, the company has been offering “co-pay” programs that reduce out-of-pocket costs for insured patients to $4 a month. These so-far legal money-making schemes only add to the illegal — but unfortunately still money-making — activities of the pharmaceutical industry that have warranted almost $20 billion in civil and criminal penalties in the past 20 years. Coincidentally, the largest criminal penalty ever paid by any U.S. company was Pfizer’s $1.2 billion in September 2009 (we wrote about this in our 2010 “Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 to 2010” report).

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