CLINICAL CORNER ~ Is This the End of Generics?

Dr. Efrat Ron, PharmD, PAHM, is a graduate of Umass Amherst and Northeastern University.  She graduated with her PharmD in 2002, and has been practicing as a pharmacist in the following settings: Hospital, Retail, Pharmacy Auditing, Outpatient, and MTM Clinical Services.  Efrat has certification in both PAHM (managed care) and Immunizations. Specialties includemedication knowledge of FDA approvals and off-label uses, HCPCS and ICD-9 codes, data-mining, counseling, intervention therapies and compliance.

Atorvastatin (Lipitor) a cholesterol medication is going off the patent for Pfizer.  This usually means that patients are switched to generic versions of a medication that ismore cost effective. This cost savings is not only for the patient, but also for Healthcare Management Organizations (HMO) that assists in the payment of the medication.  The case of atorvastatin is different.  Pfizer proactively reached out to major HMO’s in the field and struck a deal with them. In essence, lower your co-payments to your patients and we’ll lower our prices for your HMO to purchase the drug.  Pfizer will continue to distribute atorvastatin (Lipitor®) to those companies, at a new lower rate, stay in formulary, and have the co-payment the same as for a generic.

What happened to those generics millions of people are supposed to get?

Generic companies receive a 180 day exclusive right when a medication comes off patent.  That means 180 days of no competition from other generic companies.  This translates to only one generic medication and one brand name medication competing for millions of dollars from patients and HMOs.  After 180 days, a free market prevails, and any generic company can make a medication and compete at fair market value.

What happened?

Healthcare reform got rid of the cap that a company can spend on a patient.  This means that an HMO can spend on unlimited amount of money on any person, so long as it preserves and assists in continuing health.   With this in mind, Pfizer went to the HMOs and struck a deal to have them continue to be the sole distributor ofatorvastatin (Lipitor®) and at the same price as any market produced generic or even less.

What does this mean to a patient?

This means that a patient can continue to receive Lipitor® at the same price as they would pay for the generic and just get the brand name.  Who would not want that?  To be able to continue to get the same brand name medication and not have to worry about if the tablet changed color but is still the same.

Just think about it.  A patient could get brand name medications for the cost of a generic medication or less.  There would be no incentive to purchase the generics anymore, as it does not incur a cost-savings to a patient or even to the HMO.  Does this mean that medications will better serve the patient’s wallet rather than the other way around? 

What does this mean for the Health Care Market?

Pfizer essentially stripped away any fair market that generics would be able to receive by distributing the generic at a lower price.  This could mean that other companies are going to do the same and offer their brand name medications at the same price as generics when they are removed from patent.  Or this could mean the end for most of the Generic Companies.  Because without the introduction of new generics into the market place, there is no point for them to bid on medications that are off their patent or even produce those medications that only come in generics.  The big question that remains is what does the US government think about this?  Does this violate the Sherman Act?  Will CMS allow for the brand name Lipitor® to be given at a generic cost?  Or will there be a big uproar that the US Healthcare market has finally become similar to the markets available everywhere else and there is no such thing as fair market value?  Does this spell the end of the generic market?