"We want to make sure that patients who are currently taking Lipitor and want to continue ... have the opportunity to do so," said David Simmons, who heads Pfizer's Established Products business. He said research shows more than a third of patients want to stay on Lipitor.
Pfizer also is continuing assistance programs that subsidize uninsured patients wanting Lipitor, which costs about $115 to $160 a month, depending on dosage. Generic Lipitor, called atorvastatin, should cost 30 percent to 50 percent less.
People without insurance also can order the generic, with a prescription, through websites such as HealthWarehouse.com.
Patients could save even more by taking other generic drugs in the same class that have been on sale for several years: pravastatin (Pravachol) and simvastatin (Zocor). But they're not as potent as Lipitor, the key reason its sales have held up.
Typically, brand-name drugs get one or two generic competitors initially, priced about 25 percent lower. Six months later, other generic companies are allowed to jump in and the price drops up to 80 percent.
About 90 percent of the branded drug's sales ultimately vanish, as insured patients seeking a lower copayment switch over and most pharmacies automatically substitute a generic for a brand name.
Sanford Bernstein analyst Dr. Tim Anderson estimates that for a 90-day supply of Lipitor, even after paying rebates to insurers and patients, Pfizer can make a profit of roughly $100, compared with about $225 before generic competition. That's partly because administrative and advertising costs will decline, and it barely costs a dime to make a pill.
Anderson expects Pfizer's strategy to boost its earnings per share about 2 percent next year.
Meanwhile, Watson Pharmaceuticals Inc. looks to be the biggest loser in this. It has a deal to distribute an "authorized generic" version manufactured by Pfizer but sold under Watson's brand, with Pfizer keeping an estimated 70 percent of the price.
Watson CEO Paul Bisaro said he had thought Pfizer would retain about 25 percent of Lipitor users for the next six months, but now "it looks like it will be 40 to 45 percent."
Bisaro said that could reduce his company's anticipated profit next year.
"This is sort of the new generation of brand protection," he added.
India's Ranbaxy Laboratories is the only company besides Watson with the right to sell generic Lipitor in the U.S. for the next six months. But Ranbaxy has had repeated manufacturing quality problems, and it's unclear whether it will have the Food and Drug Administration's approval to ship its version come Nov. 30.
Ranbaxy said it would not reveal what will happen until then. The FDA, as is its custom, declined to comment. But Pfizer executives say they expect Ranbaxy to have a generic on the market.
An independent pharmacists group called Pharmacists United for Truth and Transparency has raised alarms that the rebate deals will stick plan sponsors — employers, unions and taxpayers — with higher costs than for generics.
But spokespeople for a few prescription benefit managers that have received Pfizer's offer say it would cost insurance plans and patients the same as, or slightly less than, for generic Lipitor.
"Next year we're going to save clients and members over $1 billion just on this drug," said Tim Wentworth, head of employer and key client accounts for Medco Health Solutions Inc., one of the biggest pharmacy benefits managers.
- Bakery ordered to pay $135,000 for mental,...
- Fans cheer as Princess Charlotte christened...
- Idaho's gay marriage ban remains in state...
- Lloyd hat trick leads United States over...
- Ten Commandments decision prompts...
- Brave dachshund Leo honored with monument in...
- Polygamous Montana trio applies for wedding...
- Greeks reject demands for more austerity in...
- Polygamous Montana trio applies for... 134
- Episcopal Church becomes third... 54
- Religious schools and universities on... 49
- Bakery ordered to pay $135,000 for... 45
- Dan Liljenquist: Time to relegate the... 27
- Obama's counterterrorism policy facing... 22
- Did the news media show bias in its... 21
- Emails show top administration... 17