America, Love It or Heal It

A blog about health, health care, and health care reform

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Cheaper generic medications: Not coming to a pharmacy near you

The New York Times reported Friday on a move by Pfizer – the makers of the blockbuster cholesterol drug Lipitor – to manipulate the market to limit generic supplies to a number a major drug management agencies after Lipitor goes generic in the coming months:

“Pfizer has agreed to large discounts for benefit managers that block the use of generic versions of Lipitor, according to a letter from Catalyst Rx, a benefit manager for 18 million people in the United States. The letters have not previously been made public. A pharmacy group and an independent expert say the tactic will benefit Pfizer and benefit managers at the expense of employers and taxpayers, who may end up paying more than they should for the drug.” [emphasis mine]

Lipitor is said to be one of the most profitable drugs ever produced, generating over $100 billion in sales and forming a mainstay of Pfizer’s drug portfolio. And this is not necessary bad; Lipitor saves lives. It plays a role in primary prevention of cardiovascular disease, it can be the difference between rehabilitation after a heart attack or stroke and rapid recurrence leading to greater debility or death. It is not without problems, but overall, it is an important drug in the modern arsenal against chronic disease.

But there are a couple complications to this picture.

One is that in the world of the statin drug class to which Lipitor belongs, not everyone with high cholesterol needs Lipitor – or, more importantly, a medication as expensive as Lipitor. There are half a dozen other drugs in the same class, several of which went generic so long ago that they appear on the Walmart list of $4-per-month medications. The older generic statins are notably weaker; this isn’t a secret. But for your average middle-aged person walking around with high cholesterol – those who eat a little too much butter, exercise a little too little, or just drew the genetic short straw on the lipid metabolism front – the cheap medications will effectively get the cholesterol numbers to where they need to be (so too often will diet, exercise, and some other non-medicinal approaches, but let’s set those aside for a moment for the sake of argument). The truly more potent (and notably more effective, and notably more expensive) statins – that is, Lipitor and Crestor – can generally be reserved for people with true disease in whom there has been a failure to get to goal cholesterol levels with weaker medications: people with prior heart attacks and strokes, people with familial cholesterol running sky-high numbers for no good reason, people who have undergone surgery to actually remove cholesterol plaques from their arteries.

But that’s actually kind of a small market compared to the millions and millions of essentially healthy 50ish folks who could head off problems in the future with a little help from a statin friend – ie, those who will probably do fine on a generic drug. So why is Lipitor such a blockbuster when the number of people who need it relatively small?

That, of course, comes down to marketing. Pfizer has long advertised the potency of Lipitor – and wouldn’t you want the best for your heart? – failing to note that cost-per-cost, the best just isn’t necessary for many people. Samples given through doctor’s offices (which are invariably branded drugs, never generics) instill brand loyalty from the side of both the doctor and patient. Moreover, pharmaceutical companies skew or hide the true cost of these upper-echelon drugs by marketing schemes like copayment vouchers that reduce the cost to the insured consumer for branded drugs from higher cost (where they should be) to zero – encouraging patients to request more expensive drugs than are necessary because the up-front cost to themselves is so low.

But true market manipulation on the scale described – that is, using the clout of a major manufacturer to block the early sales of generics – is a dangerous and costly precedent. This process is enabled by the streamlining of drugs through “pharmacy benefit managers” such as Medco, which you might have encountered as one of the “mail-in” pharmacies that more and more insurance carriers are requiring patients to utilize. However, the unspoken secret of these “mail-in” pharmacies is that many of the discount brick-and-mortar pharmacy chains carry generic medications at a fraction of the price of the mail-in servicers – sometimes at prices less than a standard generic copay for an insured patient. Insured patients are made to feel that they are compelled to use these monopolizing benefits managers, when in fact consumers are only required to do so if they want their insurance carriers to pay; if a brick-and-mortar pharmacy charges less than their standard copay for a generic drug, there is actually no reason to go through insurance at all, but rather just pay cash and bypass these middlemen altogether – something the insurers and “pharmacy benefit managers” would prefer that consumers not know about as they pay higher prices for the mail-in services.

The net effect of this is that nations like the United States that allow unfettered market manipulation pay – you guessed – more for health care while achieving less health than countries that frown on this kind of shady tactics, for example by setting formularies that account for cost-effectiveness and allowing for planned deviations when medical necessity demands.

Am I blaming Pfizer for the all the ills of the American health care system? No. But when one hand of the health care reform effort is struggling with the untamed beast of cost control – and the other hand is paying overkill prices for drugs that outstrip medical necessity – one has to wonder where the balance will be struck between innovation and affordability.

In any case, open generic competition for Lipitor will take over in the next year, ending any debate about paying full price. But the success in consumers’ and regulators’ ability to block this kind of behavior will set a long-reaching precedent in pharmaceutical patent-holders willingness to try these kind of rank shenanigans again, the next time a blockbuster drug goes off-patent. And that is something we all have a stake in.