Lipitor incentives could set industry norm for drugmakers

When the patent for Lipitor—the best-selling medication in history—expired Dec. 1, drugmaker Pfizer made an unprecedented move. It decided to provide financial incentives to health-insurance companies to make the medication as affordable as or even less expensive than any generic alternatives. Pfizer says its voluntary program’s intent is to make Lipitor’s co-pay comparable with that of generics.

However, analysts say that Pfizer also is working on agreements with health-insurance companies to potentially block the sale of generics at pharmacies. This would reduce options for consumers to manage their cholesterol by dissuading competitors from going to market with generics, experts tell Consumers Digest.

Of greater significance, if Pfizer’s strategy succeeds, other drugmakers could follow suit when the patents on their name-brand medications expire, experts say. This would limit consumers’ access to affordable medication options, according to Jennifer Brice, who is an industry manager at Frost & Sullivan.

In 2010, Lipitor’s sales were $10.7 billion globally, which makes the medication lucrative to Pfizer, of course, but also enticing to generic drugmakers, says Bill Martineau, who is a health-care-industry analyst for Freedonia Group.

According to a report from market-research company IMS Health, generic versions of medications drive down prescription costs and foster product improvements because of increased competition. If Pfizer hadn’t provided incentives, it’s likely that generic medications ultimately would take most of their cholesterol-medication customers, Brice says. Pfizer says it would pay the incentives over the next 6 months. That could prevent generics from gaining traction for up to 1 year, Martineau says.

Members of Congress have expressed concern about Pfizer’s incentive program. Sen. Max Baucus, D-Mont.; Charles Grassley, R-Iowa; and Herb Kohl, D-Wis., sent letters to Pfizer and five other health-care companies seeking disclosures about Pfizer’s program as a first step toward determining the effect that such incentives would have on medications and health-care costs. Brice believes this move could lead to regulators looking into the legalities of Pfizer’s program. Federal Trade Commission hasn’t commented publicly on the matter.

– K. Fanuko