The drug Lipitor, used to treat high cholesterol, has made more than $100 billion for the drug company Pfizer in the last 10 years, said to account for a quarter of Pfizer's revenue. But now Pfizer's patent has run out, and the company is not letting its cash cow go easily.
Adam Fein, a pharmaceutical economist who consults for drug companies, says that for the next 180 days, two other companies have the rights to sell generic versions of Lipitor, and that retail prices of the drug typically drop by 10-15 percent during this period.
But Fein says that Pfizer is pursuing an unusual strategy. Instead of keeping the price of Lipitor high, Pfizer will lower it to compete with the generics.
Pfizer is offering discounted Lipitor to companies if they refuse to sell the generic drugs (and a group of Senators is looking into whether this is legal.) Pfizer is also sending cards to customers, offering to give them the same price for Lipitor that they would pay for the generic.
"What Pfizer is saying is that they would rather have some of that revenue than none of it," Fein told Here & Now's Monica Brady-Myerov.
After that six month period, Fein says the market for Lipitor will become a wide-open field.
"Depending on the nature of the product, the size of the market, there could be anywhere from three to 25 companies entering in a generic market," he said.
"Remember they are selling the exact same product, which means that prices very quickly drop down to the cost of producing these products. You often see some very large generic products selling for literally pennies a pill," he said.
- Adam J. Fein, Ph.D., founder and president of Pembroke Consulting, Inc, he blogs about the pharmaceutical industry at www.drugchannels.net
This segment aired on December 2, 2011.