In a bid to retain as much revenue as possible from its Lipitor cholesterol pill, which lost patent protection in the US yesterday and now faces generic competition, Pfizer is undertaking several unusual strategies. These include offering incentives to health plans and pharmacy benefit managers to favor its brand-name drug (see this); providing consumers a co-pay card that lowers their cost significantly and partnering with a specialty pharmacy to mail Lipitor directly to patients.
The gambit is being closely watched by other drugmakers, payers, pharmacies and regulators for the implications as numerous best-selling meds also encounter generic rivals. Lipitor generated $10.7 billion in sales last year and capturing even a small slice of ongoing sales is important to Pfizer. But to what extent will its strategy work? To gain some insight, Reimbursement Intelligence, a market research firm, queried 42 executives from health plans and pharmacy benefit managers for their reactions.
What do they think? Overall, 66.7 percent believe the moves will not protect Lipitor market share during the first 180 days of exclusivity that Ranbaxy Laboratories has in which to sell a generic. After six months, they expect Pfizer to lose 54.5 percent of the market. And a year from now, they expect Pfizer will have lost two-thirds of the Lipitor market. Still, the register will ring.
"What Pfizer is doing is groundbreaking, because they are taking a very aggressive step to stop erosion of their brand and this will probably result in protecting billions of dollars in the first six months that would have been lost otherwise," says Rhonda Greenapple of Reimbursement Intelligence. "And partnering with a specialty pharmacy to protect a patent has never been done before. It’s a model everyone will look at and it’ll be very interesting to see what really happen after 180 days. Because if every brand does this, it could stop people from being converted" to generics.
Just the same, Pfizer is doing a so-so job of convincing health plans and PBMs that Lipitor is somehow better than a generic. On a scale of 1 to 10, Pfizer received a 4. Nonetheless, 54.8 percent say they will offer the authorized generic, which is being sold by Watson Pharmaceuticals. Meanwhile, only 30.4 percent report they will receive added rebates or discounts from Pfizer. And while the Pfizer move to offer incentives attracted attention from the US Federal Trade Commission (read here) and three US Senators, 71.4 percent do not believe there are any anti-trust implications.
[UPDATE: In an investor note, Leerink Swann analyst Jason Gerberry writes that Pfizer expects up to eight generics to compete for market share after the 180-day exclusivity period expires. And he reports that Watson execs believe Pfizer may retain 40 percent of the market, but they believe can capture more than 50 percent of the remaining generic market. Pfizer, he adds, has already contracted with half of the eligible customers and believes that its pricing is competitive comapred with Watson. "The remaining wildcard, he notes, "is Ranbaxy's pricing decision."]