The joy will be short lived as the Obama health care act adds 2 years onto that exclusive sale window. Any new drugs developed will fall under the new rules making them more expensive for a longer period of time.
The sick part is behind the scenes the US taxpayer is reimbursing much of the drug delevlopment costs under a plan origionaly put in place to fund AIDS fighting drugs.
The need for higher prices to makeup for development costs is a non-issue with many popular drugs. The higher prices are all profit.
Today, Pfizer loses its patent on the cholesterol-lowering drug Lipitor (atorvastatin) – an unparalleled pharmaceutical superstar.
What’ll take its place? Will there ever be another blockbuster like it again? What’s Pfizer going to do? Here’s a look at what’s going on.
Atorvastatin was first synthesized in 1985 by Bruce D. Roth, a chemist working at Parke-Davis Warner-Lambert Company (now Pfizer). Modeled after naturally occurring compounds known as statins, atorvastatin reduces blood cholesterol by inhibiting a key liver enzyme involved in the production of cholesterol.
Since its introduction in 1997, Lipitor sales have surpassed $100 billion. With some 8.7 million users, it produces nearly one-fifth of Pfizer’s revenues. It works better than other drugs and have few side effects.
On 30 November, its patent expires and its first generic competitor takes the stage.
This could make it available to a wider group of patients, especially those who’ve been prescribed Lipitor but haven’t taken it regularly or have been cutting pills in half to make prescriptions last longer.
But! Last year, Lipitor had $10.7 billion in sales, and this figure may drop as much as 70% by 2012.
The industry is in crisis mode over the challenges that such ‘patent cliffs’ pose for big drug companies. Including Lipitor, patent expiries in 2010–13 will jeopardize revenues amounting to more than $95 billion for 10 of the largest drug companies.
But the real problem is much deeper: the patent cliffs wouldn’t be such a big issue if research and development productivity hadn’t collapsed, Nature News reports:
A decade ago, investors realized that the pharmaceutical industry faced a perilous future. Research and development (R&D) budgets soared, but the rate at which new drugs were approved did not. As shareholders walked away, drug companies slashed R&D costs, forged outside collaborations with other firms and with academia, and generally shied away from pursuing potential blockbusters, turning toward more niche drugs.
And the new contenders are…
In order to receive Food and Drug Administration approval, generics must contain the same key ingredient and prove to be equivalent. Several other statins have already gone generic: Zocor (simvastatin), Pravachol (pravastatin) and Mevacor (lovastatin) – but they’re not as potent as Lipitor.
Under normal patent procedures, the next 180 days will be a period during which generic competition for Lipitor is still limited.
Pfizer, Watson Pharmaceuticals Inc., and Ranbaxy Laboratories Ltd. are the only companies that will be authorized to sell atorvastatin. In 6 months, however, the floodgates will open, and the price of atoravastatin will drop to pennies per day.
(Some pharmacies will have atorvastatin available today, but it’ll probably take time for their shelves to fill with generics and for most patients to get on them.)
So what about Pfizer?
The company will minimize its initial losses by making deals with insurers and pharmacy benefit managers to lower the price of the branded drug in return for agreements to block the use of generic copies:
CVS Caremark Corp. will offer Lipitor exclusively for patients in Medicare’s drug benefit, which affects about 3 million patients. Health insurers, including Coventry Health Care Inc. and UnitedHealth Group Inc., have agreed to similar pacts.
The company is also offering insured patients a discount card to get Lipitor for $4 a month, far below the $25 average copayment for a preferred brand-name drug and below the $10 average copay for a generic drug. For some people, if they can get the name brand at the same price or for pennies more than the generic, there may be no motivation to switch.
And in any case, Pfizer is not a one-product company. The drugmaker is depending on 4 products to generate $4 billion in new revenue by 2014: a bacterial infection vaccine, blood-thinner, rheumatoid arthritis drug, and cancer drug for non- small-cell lung tumors.
