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Pfizer’s Latest Twist on ‘Pay for Delay’

Pfizer is adding yet another twist to its efforts to delay generic competitors. As The New York Times reports, the company seems to have struck a deal with certain pharmacy benefit managers — the middlemen in the pharmaceutical industry — to block generic versions of Lipitor.

TIMOTHY A. CLARY/AFP/Getty Images

Pharmaceutical companies have sought for years to protect their expensive brand-name drugs by paying generic rivals handsome sums of money to put off efforts to introduce cheaper, generic alternatives that could steal market share.

The controversial practice, known as “pay for delay," occurs as part of patent litigation settlements and typically buys a brand-name drug company more time to sell its blockbuster drug exclusively until its patent on the drug expires. Federal Trade Commission regulators have said the practice costs consumers an estimated $3.5 billion each year, and have pushed for a ban.

But now it appears the drug company Pfizer is adding yet another twist to its efforts to delay generic competitors. As The New York Times reports, the company seems to have struck a deal with certain pharmacy benefit managers — the middlemen in the pharmaceutical industry — to block generic versions of Lipitor.

Lipitor, Pfizer’s blockbuster cholesterol-lowering drug, is among the world’s best-selling pharmaceuticals, and this isn’t Pfizer’s first attempt to protect it.

In 2008, the company settled patent litigation with Ranbaxy, an Indian generic manufacturer, striking a deal that guaranteed that Pfizer would not have to face challenges from Ranbaxy’s generic version of Lipitor until the end of November 2011. Pfizer granted Ranbaxy some incentives as part of the bargain but said it made no payments. Nonetheless, a group of pharmacies filed suit against Pfizer and Ranbaxy last week over the deal, calling it “an extraordinary ripoff” and alleging price-fixing between the two companies.

Now that it's November 2011, Ranbaxy and other drugmakers are gearing up to offer cheaper versions of Lipitor. As The Times reports, Pfizer has tried to counter this competition by offering big discounts on Lipitor to the middlemen that process prescriptions for pharmacies and other buyers, giving them discounts in exchange for having them block generic versions of Lipitor for another six months. Here’s The Times:

Many drugstores are being asked to block prescriptions for a generic version of Pfizer’s Lipitor starting Dec. 1, when the company loses its patent for the blockbuster cholesterol drug and generic competition begins.

Medco Health Solutions, among the nation’s largest pharmacy benefit managers, is one of the companies issuing instructions, seeking to have pharmacists keep filling prescriptions with the more expensive Lipitor for six months.

See some of those instructions sent to pharmacies by the pharma middlemen. The documents were released by Pharmacists United for Truth and Transparency, a group of independent pharmacists. (We first noticed them posted at the blog Pharmalot.) 

According to the group, Pfizer’s plan would mean that customers at the pharmacies serviced by these middlemen would receive Lipitor even when they’ve been prescribed a generic version. Because Lipitor co-pays would also be reduced to the level of generic co-pays, customers might not notice, but employers and Medicare Part D would pay the same amount as before, despite the availability of a cheaper alternative. 

A Pfizer spokesman gave The Times a statement saying that the company was committed to ensuring that customers had access to Lipitor but declined to answer additional questions. We've also asked Pfizer for comment and will update when we hear back.

2 words price fixing

Thanks ProPublica for publishing this issue which I had been bothered by for a long time.
I found the price of medications in North-America more than (apprx.) 25 times higher than the price of the medications with same or similar ingredients in India, Bangladesh etc. (e.g. A bottle of expectorant / cough syrup or a box of atorvastatin / cholesterol lowering tablets).
I am sure, with our encouragement Obama’s Administation will be able to put an end to this too highly profiteering practices.

Barry Schmittou

Nov. 14, 2011, 5:44 p.m.

ProPublica recent quotes to remember :

“Drugmaker Eli Lilly pleaded guilty to illegally marketing its blockbuster antipsychotic Zyprexa for elderly patients. Lilly paid $1.4 billion in criminal penalties”

(No one was prosecuted)

“A doctor named as a co-defendant in one suit - for allegedly taking kickbacks to prescribe the drug extensively at nursing homes - never was pursued.”

“Alpharma paid $42.5 million to settle fraud allegations that it paid kickbacks to doctors to prescribe its painkiller Kadian.”

“At least 15 drug and medical-device companies have paid $6.5 billion since 2008 to settle accusations of marketing fraud or kickbacks.”

(No one was prosecuted)

“None of the more than 75 doctors named as participants were sanctioned, despite allegations of fraud or of conduct that put patients at risk, a review by ProPublica found.”

(end of ProPublica quotes)

Please add to that the quotes from this article about the Pharmacists United for Truth and Transparency :

“According to the group, Pfizer’s plan would mean that customers at the pharmacies serviced by these middlemen would receive Lipitor even when they’ve been prescribed a generic version. Because Lipitor co-pays would also be reduced to the level of generic co-pays, customers might not notice, but employers and Medicare Part D would pay the same amount as before, despite the availability of a cheaper alternative.”

I pray and hope a Grand Jury will add this report to the lists of insurance company, physician and corporate bid rigging, frauds, and money laundering that should be investigated as seen at deadlyorganizedcrimes.blogspot.com and obamadrugmurdersconnection.blogspot.com and the associated links.

I have evidence that the Bush administration also protected corporate crimes including AIG bid rigging in Workers Comp, and DOL and DOJ’s failures under Bush and Obama to uphold the law and protect injured and disabled workers and injured and families of deceased War Zone contractors, but my documentation of Bush is not as extensive due to multiple surgeries during his administration and falls and accidents then and now.

A friend of mine’s grandchild is going to be on a Crohn’s disease medication “for the rest of her life”, paying $600 dollars a month for it. I told the grandad I would see if I had friends on a social networking site internationally who could possibly find this medication cheaper, such as in the U.K. It’s a lot more money for medications here, and with this generic alternative being delayed, it just rips off the American consumer even more. I hope I can find someone to help, I wouldn’t have even known if I hadn’t watched “Sicko”, by Michael Moore.

On the surface this seams like a victimless crime, however under part D of Medicare the patient will reach the donut hole earlier and will have to pay for all medications themselves once this occurs.

This was a very nice article but its just the tippy rippy top of the iceberg.
I have a close friend that works for one of the major pharmas and the 5 largest drug companies are like the 5 NY Crime families excepting the drug barons have more brains and really know how to steal, big time.

This is an incesteous disease and all of them know exactly what the other is doing and won’t step on any toes because they all know how to hurt anyone that gets out of line.

This is not new but has grown geometrically in the past 30 years to a point that they have everyone with anything worse than a headache paying a percentage of their wealth or earnings on a monthly basis.

Nest to the mortgage crimes by the banksters, this is the next leading criminal activity currently going in in the USA.

While the populus is watching Dancing with the Stars and the NFL, our pockets are being picked by professional criminals with advanced degrees and licenses to pratice law, accounting, and medicine. While the government has us worried about violent crime, we are being hijacked by the pen.

Walter D. Shutter, Jr.

Nov. 14, 2011, 8:44 p.m.

As Dirty Harry Callahan noted in “Magnum Force”: “A man’s got to know his limitations”.  Apparently I have just discovered one of mine because, for the life of me, I can’t understand this article.  Why aren’t the health insurance companies preparing to sue the pharma middlemen come December 1, 2011?

Medco, mentioned in this article as a company that would continue dispensing the more expensive Lipitor for six months, doesn’t know about the delay, according to the agent I spoke with.

But that does not say the article is not true.  Just that that agent is ignorant of it.

My advice is to be suspicious and demand the generic. 

Also make sure your doctor prescribes that the generic is allowed.

Maximize profit, cut costs and eliminate labor, that is the mantra of the capitalist class or the 1%.  Don’t you believe in the “golden rule”? Them that has the gold, write the rules.”  How much more bling, yachts, fancy cars and summer homes do the rich need?  Growth for the sake of growth, is the ideology of cancer cell.  Occupy them, shut them down and take them over.  There greedy days are numbered.

I have COPD and need two drugs to continue to breathe.  There is no generic for either Spiriva or Symbicort.  There is another brand name drug as an alternative for Symbicort called Advair.  If these names are familiar it’s because they are on TV daily to the tune of Millions of dollars in advertising.  I am on Medicare and because of the price of these drugs, (over $250.00 and $300.00 ea per month), I hit the gap in drug coverage in June or July because of the price of these two drugs.  Even paying half price it costs about $250 per month. Every time I see one of those TV ads it infuriates me that I am paying for a portion of the ad. Why do they need to advertise drugs like these so heavily?  Because they want to establish the brand name for when there is a generic available.

Malcolm_McLean

Nov. 15, 2011, 3:20 a.m.

*^*^*^ Don’t worry - OBAMACARE is on it’s way *^*^*^

No drug companies and medical suppliers will be able to bill and rip off the American people with th full support of the president!

If Medicare is being ripped of by $Billions a year in phoney billing, just think how much more these criminals can fraudulently steal from the Medicare program - now that it is institutionalized!

When is someone in Congress, the US AG Office or the FBI going to do something.

We have Wall Street creating the worst fraud in history, drug companies ripping American’s off with criminal price fixing, and we are waging a $trillion war in several countries.

I would say Terrorism is the least of our worries.

Single Payer would totally solve all of the problems listed in the article and in the comments. Support Physicians for a National HealthPlan, Healthcare-NOW! and HR 676.

The US is the only industrialized country in the world that does not use this approach.

Well, the defense of extended Intellectual Property rights is always that “it drives innovation.”  It’s doing that here, clearly…just not in the pharmaceutical field.  Lots of legal innovation, though.

Here’s the real problem:  Pfizer has had twenty years to arrange its sales to maximize their profit and exclude everybody else.  This wasn’t a crapshoot or a lottery.  They gave the formula to the public in exchange for a two-decade monopoly.

They’re trying to use the last gasps of their monopoly power to drive out competition for a chemical that’s now in the public domain.  That’s not just price-fixing as suggested, but also unfair business practices by a monopoly.  A good lawyer can probably also argue conspiracy to commit fraud (overcharging Medicare) and even counterfeiting (under the newly-signed ACTA, which they supported to protect you from thinking you bought a real Rolex from a trenchcoated man on a streetcorner) is a possibility if they’re forcing drug stores to substitute the brand name for the generic.

Hal hits the nail on the head:  They should be using their brand recognition and quality standards to trump the generics, just like people will buy “official” versions of books, TV shows, and movies that have passed into the public domain and are available far cheaper elsewhere.

And, by the way, they’re doing this instead of producing a better medication.  Statins in general and Lipitor specifically has a long list of unpleasant effects, which Pfizer apparently thinks is just the cost of doing business.  In those twenty years of monopoly, the aim of a short term is to encourage them to develop something better to replace the existing product.  Clearly, they’d rather cheat the system than innovate.

Barry Schmittou

Nov. 15, 2011, 12:24 p.m.

John wrote :

“A good lawyer can probably also argue conspiracy to commit fraud (overcharging Medicare)”

I wish John were Attorney General !!

If both political parties stopped appointing AG’s who protect corporate thugs and murderers then crimes like these would be stopped immediately.

I pray God will be with Hal and everyone like him who is being ripped off and endangered because the U.S. Government is protecting and encouraging so much big business evil !!

One example is Obama and Bush both protected MetLife’s consultant doctors’ who ignored brain lesions and Multiple Sclerosis of Ms. Jacquelyn Addis, a foot that new mother Joanne vick broke in five places, and cardiac conditions of many patients as seen in quotes from Federal Court Judges I’ve posted at deadlyorganizedcrimes.blogspot.com

Thank you! Thank you! Thank you!

Rather than the government negotiate fair drug prices, we have to depend on predatory corporate chains like Walmart.

Doctors in free safety net clinics rely on generic $4 drugs through the big boxes.

No doubt supply will shrink as this demand increases.

I love the smell of napalm. errr…. capitalism, in the morning!

Stephanie Palmer

Nov. 16, 2011, 9:51 a.m.

I will never take any drug manufactured by Pfizer. If enough people refuse Pfizer drugs, maybe Pfizer will get the message. And if Pfizer doesn’t, it will never affect me.  Canada just isn’t that far away.

Man, Barry, what did I ever do to you…?

More seriously, my big problem with this case is something that’s against the spirit of the law (including the Constitution), but not technically illegal unless the effects are felt in areas like I suggest (anti-trust being probably the best tool).

Pfizer is basically trying to stonewall progress and extend their monopoly rights on what is now in the public domain.  That is, subject to economies of scale and FDA approval, any of us can legally produce and sell atorvastatin, but they’re trying to kill any possible competition.

What they’re doing, in effect, is stealing from the public.  The formulation and use of atorvastatin belongs to all of us, now that the patent has expired.  We gave them a monopoly over it in exchange for them releasing the rights to it today (well, June).  Imagine the Edison estate negotiating to squeeze all light bulbs off the market except their century-old models.

They’ve had twenty years (more, actually—the USPTO granted them an extension in 2009, which is a little odd) to cover their investment in developing the drug.  If they haven’t yet (which is NOT the goal of a patent), it’s time to turn out the lights and go home.

(I’m a bit touchy when it comes to patents.  Being in software, a day doesn’t go by without news of some small company or even a friend being sued for obvious technology that some worthless company managed to sneak into a patent.  Amazon owns “buying something with one click.”  Microsoft owns “showing an animation while media buffers.”  A law firm owns “buying an upgrade from inside a program.”  It’s insane, and violates all sorts of rules regarding obviousness and prior art.  So I’m not exactly charitable when I see patents being used for abuse.)

Barry Schmittou

Nov. 16, 2011, 11:26 a.m.

Hey John,

I meant my wish for you to be Attorney General to be a big compliment. I think you were joking in your response but wanted to be sure you knew.

We all have different opinions sometimes, but I believe you have empathy and concern for people; you do not like injustice, and if we could have someone with those traits as Attorney General the whole world would be a much better place.

There are many commenters and ProPublica writers who would make a much better AG than we have now. Holder and Ashcroft etc blockade justice instead of uphold the law and the damages from that are extremely exponential. Most people cannot imagine the suffering of millions that Bush and Obama have enabled. You can view a very brief glimpse by reading my Psychologist report that is seen by pasting :

mypsychologistsreport.blogspot.com

Barry Schmittou

Nov. 16, 2011, 11:33 a.m.

I forgot to add that Obama’s directors read the reports seen at mypsychologistsreport.blogspot.com and all the other evidence seen at deadlyorganizedcrimes.blogspot.com and obamadrugmurdersconnection.blogspot.com

Obama’s Directors did nothing about all the damages to so many lives and they ignored my doctor writing MetLife “seemed reckless, careless, dangerous and inhumane”

Numerous Judges wrote similar things as seen at deadlyorganizedcrimes.blogspot.com

MetLife gives Obama huge contributions and Obama did nothing even though U.S. District Judge Enslen wrote “MetLife and it’s henchmen”

The Grumpy Buddha

Nov. 16, 2011, 1:18 p.m.

The linked info suggests that it’s not as bad (?) as it seems (??)—as best I can tell from https://www.documentcloud.org/documents/266336-lipitor-pbm-documents.html—the price of the generic is (at the moment) almost the same as for Lipitor, and the six-month wait is so that other manufacturers can enter the market and bring the price down.

Of course, I might be misreading something, and it *could* still be bad, but it doesn’t sound at the moment like the health insurance companies (and thus, all of us) would be getting screwed by having to pay for Lipitor instead of the generic.

Still very sketchy to override physician’s prescriptions, though, if they prescribe the generic.

I was joking, Barry, no actual offense taken.  Sorry for the confusion.

You’re right that we’re getting close to the point (or maybe we’re past it?) where picking random people off the streets and putting them in office might actually be more productive than the group we have in there.  The SOPA hearings yesterday were embarassing, clearly rigged to cast everybody on the Internet as a pirate and show that the government and big business need more power to protect themselves against us.

Barry Schmittou

Nov. 17, 2011, 8:07 p.m.

Thanks John,

Hopefully you will be Attorney General soon : )

Then, after the SOPA hearings are investigated for being a fraudulent farce, I’d like to see an SGPCPA investigation.

(That’s Stop Government Protection of Corporate Piracy Act)

This is just business as usual for big pharma and no one should be surprised.  There was a joke among career staff when I worked for the Medicare program.  The joke was the greatest fear of these phony free market champions and crooks we dealt with every day was…..real competition.  This is why you see pharmaceutical companies maunfacturing copycat drugs to artificially extend patents, paying off generic drug manufacturers not to make generic drugs, and making side deals with box stores and mega pharmacies. This isn’t capitalism, this is influence peddling.  Merrill Goozner’s wonderful book, “The $700 Million Dollar Pill,” examines these practices in detail. One of the worst offenders is a company called Amgen, a one-trick pony that makes half of its profits from one drug, Epogen, used to manufacture red blood cells for dialysis patients.  And most of its sales are to Medicare which covers end stage renal disease, the only specific disease covered by the program.  As consumers, you have options.  Since taxpayers already pay for well over half of the basic scientific research (via public research grants) that is used as the basis for developing drugs, you can write to your local politicians and demand that Medicare be allowed to bargain for lower drug prices just like the VA and any health insurance company.  Maybe some of these phony tea party zealouts might see this as a fair and obvious way to cut spending (and maybe pigs will fly), but more rational politicans know this is true.  You can also stop doing business with companies like Pfizer that make sleazy deals to steal your money.  Ask your doctor for an alternative drug is there is one.  Take your prescriptions elsewhere if your box store or pharmacy is playing ball with Pfizer.  Money talks as any drug mogul will tell you.

Clinical Phamacist

Dec. 4, 2011, 11:47 p.m.

This article and many others are somewhat misleading. The generic version will not have a significant price drop until July when there are more manufacturers and competition which will cause the price of the generic to drop. Until then, there are some PBMs who have transparency, i.e. pass through pricing (where they pass on all the rebates to the plan/client), thereby protecting the plan from the higher costs associated with having a reduced member co-pay for a generic drug whose price hasn’t yet dropped. Also, most plans that I have seen are allowing members to get the brand Lipitor for a generic copayment, therefore this situation is a win/win for patients and plans.

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