Comments on: Drugmakers Seek to Outwit Generic-Drug Competitors http://blog.pharmtech.com/2011/12/05/drugmakers-seek-to-outwit-generic-drug-competitors/ The blog of Pharmaceutical Technology magazine Thu, 09 May 2013 23:30:55 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: Diane Monjay http://blog.pharmtech.com/2011/12/05/drugmakers-seek-to-outwit-generic-drug-competitors/comment-page-1/#comment-42301 Diane Monjay Thu, 08 Dec 2011 15:47:08 +0000 http://blog.pharmtech.com/?p=5015#comment-42301 If Pfizer is offering PBMs a rebate for keeping branded Lipitor as the preferred atorvastatin for patients, as long as the net price of the brand is within spitting distance of the generic, then why the uproar? Pfizer would never offer the rebate if it were not for the generic competition, therefore, the brand-to-generic system achieves its purpose. PBMs will not be easily lured into accepting trifling rebates that don't net out to approximate the lower price of the generic. If PBMs can block the generic, then they can obviously block the brand. PBMs are looking for the best deal for themselves and the best arrangement for the patient. If they can keep the patient on the same pill, the same color, and same pill shape and reap the benefits of a lower net cost - then everyone wins, right? On top of that, if Pfizer offers a co-pay coupon, then the patient continues to win. Branded co-pays are generally twice that of generic co-pays, which means the patient pays more of the drug's cost. The co-pay coupon usually just drives the branded co-pay costs down to a generic level. Yes, co-pay coupons given to patients encourage brand use, and brands are generally more expensive than generics. BUT if Pfizer is offering a rebate to PBMs on the brand rendering the net price to approximate the generic cost, everyone wins - except the generic company. Hey, but that's competitive market forces in action. Typically, the generic comes out at a price 10-20% less than the brand. The generic company reaps huge profits until enough players saturate the market to drive the price down to peanuts. Generic companies make all their profit in the first year of a generic's launch. If Pfizer wants to keep it's market share, and compete with generics, why not? Why should government get involved? If Pfizer is offering PBMs a rebate for keeping branded Lipitor as the preferred atorvastatin for patients, as long as the net price of the brand is within spitting distance of the generic, then why the uproar? Pfizer would never offer the rebate if it were not for the generic competition, therefore, the brand-to-generic system achieves its purpose. PBMs will not be easily lured into accepting trifling rebates that don’t net out to approximate the lower price of the generic. If PBMs can block the generic, then they can obviously block the brand. PBMs are looking for the best deal for themselves and the best arrangement for the patient. If they can keep the patient on the same pill, the same color, and same pill shape and reap the benefits of a lower net cost – then everyone wins, right?

On top of that, if Pfizer offers a co-pay coupon, then the patient continues to win. Branded co-pays are generally twice that of generic co-pays, which means the patient pays more of the drug’s cost. The co-pay coupon usually just drives the branded co-pay costs down to a generic level. Yes, co-pay coupons given to patients encourage brand use, and brands are generally more expensive than generics. BUT if Pfizer is offering a rebate to PBMs on the brand rendering the net price to approximate the generic cost, everyone wins – except the generic company. Hey, but that’s competitive market forces in action.

Typically, the generic comes out at a price 10-20% less than the brand. The generic company reaps huge profits until enough players saturate the market to drive the price down to peanuts. Generic companies make all their profit in the first year of a generic’s launch. If Pfizer wants to keep it’s market share, and compete with generics, why not? Why should government get involved?

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