Medco Plans to Block Generic Lipitor

Published Online: Tuesday, November 15th, 2011
Laura Enderle, Associate Editor

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The threat of generic competition prompted Pfizer to grant discounts on Lipitor to PBMs who agree not to cover its generic equivalent.

Much has been made of the potential for generic Lipitor to slash drug costs when it enters the market later this month, but pharmacy benefit managers (PBMs) aren’t in a rush to make the switch.

In letters to pharmacists last week, PBMs instructed pharmacies to continue dispensing brand Lipitor for the next 6 months. This reversal of business as usual reflects new tactics by Pfizer to keep sales afloat as generic competition threatens its blockbuster drug. PBMs that agree to keep generic atorvastatin off their formularies will receive substantial discounts on Lipitor, courtesy of Pfizer.

So far, the drug manufacturer’s strategy is working.

Medco Health Solutions informed pharmacists that it will not cover generic Lipitor for members of Covenant Health Care, a managed care plan that contracts Medco to provide prescription drug coverage to its 1.2 million beneficiaries. Beginning December 1, 2011, claims for generic atorvastatin will reject with a secondary message of “Submit brand Lipitor,” according to the memo.

Other benefit managers followed suit, with CatalystRx and MedImpact Healthcare Systems issuing similar notices to pharmacies in their networks. In its letter, CatalystRx described the move as part of its ongoing efforts to “support continued access to affordable prescription drug benefits.”

To offset the expense of dispensing Lipitor instead of its generic equivalent, which would cost payers roughly $35 less, Pfizer is offering benefit managers a point-of-sale discount that undercuts the generic price. As a result, most patients taking Lipitor will see their copays drop to about $10 per prescription, the New York Times reported.

The block on generic Lipitor is scheduled to lift on May 31, 2012, when several other generic drug makers are expected to launch their versions of the drug.

Pharmacists push back

The letters from pharmacy benefit managers were provided to Bloomberg and the New York Times by Pharmacists United for Truth and Transparency, a newly formed pharmacists’ group that recently launched a public awareness campaign to unveil what it calls “unethical and misleading” PBM policies.

Dave Marley, RPh, founding member of the group and author of a Pharmacy Times blog about bringing accountability to the PBM industry, told NYT that employers and taxpayers will bear the brunt of excess costs under the new arrangement—even as Medco and other PBMs pocket Pfizer’s rebate dollars.

In statements and interviews, spokespeople from Medco and CatalystRx insist the plan is both legal and routine. “This is a custom plan design, which is not a new concept,” Ann Smith of Medco told Bloomberg. They view excluding generic Lipitor from their formularies in exchange for discounts from Pfizer as just another way PBMs negotiate to keep drug costs low.

Marley disagrees. “We’re talking about blocking a truly less expensive drug,” he said. “This is the most aggressive I’ve seen, where they are trusting the employer is not going to figure out the whole game.”

UPDATE: Medco responds
At 10:30 AM, November 16, a representative of Medco contacted Pharmacy Times with additional details about Lipitor coverage for members of its client health plan, Coventry Health Care.

According to Medco, “the Times story references a client-specific notice sent by Medco to retail pharmacies on behalf of a single health plan client that has chosen to work with Pfizer directly to continue using branded Lipitor rather than the generic product during the generic exclusivity period.” Medco stressed that it would not retain any rebate dollars from Pfizer.

For the remaining 99% of its other client health plans, Medco said it will not restrict retail pharmacies from dispensing generic Lipitor when Pfizer’s patent expires November 30. To keep supply stable during the transition, the benefit manager plans to use brand Lipitor as its “house generic.”

The substitution will not affect costs to patients or health plans, who will pay the same as they would for the generic drug, Medco said.

For other articles in this issue, see:

robert gibson November 15th, 2011 05:11:0205:02:36 PM

Remember how congress got paid off to block competitive bidding by medicare? It looks like the same game is being played. The public be damned.

Mickey L Morrow, Dph November 15th, 2011 06:11:0906:09:02 PM

So ur not any better than the Government. I thought your company had more sensitivity to the needs of the patients than that. Oh well guess we va boycott your other products!!!!!l

David Kerr, Rph J D November 16th, 2011 09:11:0609:06:39 AM

Aside from inviting antitrust issues, what about states that require the use of generic equivalents without regard to price for filling the scripts? Of course if Pfizer has its own generic version as a dual product it keeps the business with the ongoing program also.

Paul H. Felgner, RPh (Retired} November 16th, 2011 03:11:0603:06:48 PM

Once again the corrupt "Big Pharma" wins and the public will pay. When will we ever learn?

Charles Hinze November 16th, 2011 05:11:2605:26:49 PM

I am very sorry that a drug company I used to respect has gone to such low life schemes. I have been an RPh for 50 yrs & I will do everything I can to prevent MDs from prescribing MSD products. I hope many others will side with me.Thanks CLH RPh

Richard Kosack November 17th, 2011 10:11:1510:15:18 AM

This ploy sounds a little like a monopoly is being formed between Big Pharma and Big PBM!
This a the kind of activity that makes people want to Occupy Wall Street Now.

Jacqueline Van Voorhis December 3rd, 2011 01:12:1801:18:49 AM

My husband was a pharmacist, so was his father,uncle.The pharmacutil company's are robing the people it's time to boycot the companys, They claim research was costly ,yes I was in research but they have made that up in no time. We have to go after the companys.

Greg January 18th, 2012 11:01:4511:45:28 AM

This is pure BS. Medco (United HealthCare) just blocked the purchase of Generic Lipitor for me. EVEN THOUGH it is on the list of covered meds. Furthermore, UHC has listed generic atorvastatin as tier 3 (highest copay) and kept Lipitor at tier 2.
The FTC should look into this... It's the same as PRICE FIXING

David Nivison March 10th, 2012 08:03:3808:38:59 PM

The financial arrangements described in this article favoring the marketing of Lipitor over cheaper generics appear to be a blatant violation of the Sherman Antitrust Act and should be vigorously prosecuted by the US Department of Justice.

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