Herper: Cheap Lipitor could increase health costs

In a report this morning, Forbes' Matthew Herper writes that a war over Lipitor could contribute to higher healthcare premiums--even for those who don't use the drug. As Herper notes, Pfizer late last year launched a coupon card allowing insured patients to purchase a month's supply of Lipitor for as little as $4. The card will pay up to $50 of the co-payment of the price. But the patient's insurance company is left paying the rest, which could be four times the total cost of a generic alternative. And because insurance plans may have to pay more money because of the program, potentially higher premiums could result.

"Coupons and co-pay cards are an attempt by manufacturers to get consumers to use expensive brands and to stick payers with the extra cost," says Mark Merritt, chief executive of the Pharmaceutical Care Management Association. Merritt "intones ominously" that using co-pay cards is "short-sighted" because the plans can find ways to limit their use, Herper says.

For its part, Pfizer says the co-pay card serves to help patients, who often opt for no treatment at all when faced with a high copayment. And Pfizer isn't the first company to use these co-pay cards or coupons; Amgen's Enbrel and Abbott Laboratories' Humira cost thousands of dollars, and the manufacturers issue cards or coupons that can reduce patients' copays to $5 or $10 a month.

But Lipitor, which accounts for 9 percent of Pfizer's total revenue, is different; there is a large amount of money at stake as generic versions become available starting in November. And cholesterol-lowering drugs are among the biggest costs for any health plan. "Pfizer is obviously trying to use their co-pay cards to defend Lipitor against generics," says Richard Evans, the health care analyst at Sovereign & Sector in Washington, D.C. He expects insurers to stage a response that could make similar co-pay cards unworkable in the future, because they can't afford for patients not to switch to generic Lipitor. "Pfizer is forcing an endgame on co-pay cards," says Evans.

- see Herper's report