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Senators Probe Efforts to Beat Back Generic Lipitor

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Just as generic Lipitor (atorvastatin) hit the U.S. market Wednesday, three U.S. senators fired up an investigation into Pfizer's aggressive campaign to hang on to Lipitor's market share.

Sens. Charles E. Grassley (R-Iowa), ranking member of the Senate Judiciary Committee, Herb Kohl (D-Wis.), chairman of the Special Committee on Aging, and Max Baucus (D-Mont.), chairman of the Senate Finance Committee, released copies of letters they sent to Pfizer and to drug benefit companies and insurers seeking more information about Pfizer's efforts.

Spurred on by published reports that Pfizer had agreed to provide discounts to pharmaceutical benefit management companies (PBMs) and insurance companies if the PBMs and the insurers would block prescriptions for generic atorvastatin, the senators -- all of whom have been frequent critics of the pharmaceutical industry -- went public with their inquiry less than 24 hours after Lipitor lost patent protection.

"While letters from PBMs to pharmacies indicate that a plan member's copay for Lipitor would be discounted and equal to the cost of a generic prescription, we are concerned that the PBMs may charge health plan sponsors, including employers and Medicare Part D, full price for brand-name Lipitor from Dec. 1, 2011, through May 31, 2012, while pocketing the discount from Pfizer," the senators wrote to Ian Read, president and CEO of Pfizer.

The senators requested a list of all agreements between Pfizer and PBMs or health insurance plans in which the "PBM or the plan agrees to exclude a generic drug from plan coverage or favors a Pfizer drug over a generic."

And the senators signaled their intent to follow the money to determine if the rebates from Pfizer to PBMs and insurers are noted as rebates and not as fees -- an important distinction since the government can pocket discounts listed as rebates.

Letters to PBMs such as Medco Health Solutions and Catalyst RX requested similar documentation pertaining to any agreements they might have made with Pfizer to restrict the prescribing of generic atorvastatin.

In 2007, USA Today reported that Pfizer had sent a CD to physicians that contained samples of two letters: one for health plans and one for pharmacists. The letters made the case that using cost as the basis for switching from the Lipitor brand product to generic atorvastatin would "undermine the clinical judgment that went into the decision to prescribe Lipitor for this patient," according to the article.

At the time, Pfizer said the letters were developed at the behest of physicians.

"Consumers and taxpayers foot the bill when drug benefit companies and insurers manipulate the marketplace to prevent access to generic drugs for millions of Americans," Sen. Kohl said in a statement.

A copy of a formulary coverage change letter from Medco to Coventry Health Care indicates that from Dec. 1, 2011, to May 31, 2012, it will not cover generic atorvastatin and that Lipitor will remain a Tier 1 covered drug. A similar letter was sent by Future Scripts to its pharmacies stating that Lipitor will remain a Tier 1 drug also until May 31, 2012, at which time the block on atorvastatin will be lifted and Lipitor will then move to Tier 3.

Consumers as well have received discount cards in the mail or through their doctor's office giving them the opportunity to purchase Lipitor for a $4 copay.

In the meantime, the FDA yesterday approved Ranbaxy Laboratories to make the first generic version of atorvastatin in four strengths: 10 mg, 20 mg, 40 mg, and 80 mg. Ranbaxy had been under FDA scrutiny. Ranbaxy's manufacturing process had been under FDA scrutiny. The drug will be manufactured by Ohm Laboratories in New Brunswick, N.J.

Ranbaxy will be the sole maker of the generic drug for six months, which is why the deals between Pfizer and PBMs extend until May 31 of next year. The cost of the generic is expected to be about 25% less than the branded drug. In six months, other generic makers will enter the market and the price will drop further.

Watson Pharmaceuticals, however, has already shipped about 28,000 generic atorvastatin pills to pharmacies. Interestingly, Watson has a deal where Pfizer will make the generic drug and supply all doses to Watson, according to a report from the Associated Press. Pfizer, in turn, will bank nearly three-quarters of the profit.

Also, Teva Pharmaceuticals announced that it will share in a portion of the profits fromRanbaxy's sales of generic atorvastatin during Ranbaxy's exclusive six-month period. Terms of the agreement will not be disclosed. Teva will sell its own generic version of Lipitor once the six-month exclusivity period ends.

Despite the senators' probe and some seemingly damaging press coverage, Pfizer's tactics might win in the end. Reports have indicated that Pfizer's stock is up and that its campaign to fight generic competition with money and aggressive marketing may become a model for future pharmaceutical companies facing patent expiration.