Pfizer Strikes Pharmacy Deals to Hold Lipitor Sales

Pfizer Inc. (PFE) is seeking to add Express Scripts Inc. (ESRX) to the list of U.S. pharmacy benefits managers that won’t dispense generic Lipitor after the world’s best-selling drug loses patent protection this month.

Lipitor had $10.7 billion in sales last year, about half in the U.S. Deals made with companies such as insurer Coventry Health Care Inc. (CVH) may help Pfizer retain as much as 40 percent of users through May, said Paul Bisaro, chief executive officer at Watson Pharmaceuticals Inc. Watson is producing a generic version approved by New York-based Pfizer.

Securing that much of the market would produce sales of about $932 million in 2012, compared with $233 million if Pfizer retained just 10 percent, the amount generally seen for medicines losing patent protection, said Tim Anderson, an analyst with Sanford C. Bernstein in New York. Express Scripts provides medicines to about 90 million workers.

“We have had discussions with Pfizer,” said Brian Henry, a spokesman for St. Louis-based Express Scripts, in an e-mailed response to questions. While he declined to comment on where the talks stand, he said “Pfizer has offered similar deals in the marketplace.”

Pfizer’s deal with Bethesda, Maryland based Coventry is being overseen by Medco Health Solutions Inc. (MHS), its pharmacy benefit manager.

Blocking Generics

Under Pfizer’s agreements that are being administered by Franklin Lakes, New Jersey-based Medco and Rockville, Maryland- based Catalyst, the companies will block generic versions of Lipitor from reaching some customers until the end of May 2012, according to documents obtained by Bloomberg.

CVS Caremark Corp., the U.S.’s second-biggest PBM after Express Scripts, had no immediate comment, according to Christine Cramer, a spokeswoman for the Woonsocket, Rhode Island-based company.

“Pfizer is trying to avoid just a total collapse, since the U.S. is such a big market,” said Christopher Bowe, an analyst with Informa-Scrip Intelligence in New York.

There’s a big incentive for distributors to move quickly to offer the generic copy “so managing it for the first sixth months without a complete collapse, that’s really important,” Bowe said in a telephone interview.

Mackay Jimeson, a spokesman for Pfizer, said the agreements wouldn’t raise costs for insurers who make the deals. “Our strategy during the 180-day period is to help patients who want to stay on Lipitor have access to the brand after loss of exclusivity,” Jameson said in an e-mail. “Total costs to payers are less than a generic option and patients receive Lipitor at co-pays comparable to generics,” he said.

Watson Agreement

Watson, based in Parsippany, New Jersey, has an agreement with Pfizer for an “authorized generic” version of Lipitor that will hit the market on Nov. 30, and will split revenue with Pfizer on the pill. India’s Ranbaxy Laboratories Ltd. has the rights to bring its own generic competitor to market on that date.

Ranbaxy, though, has yet to resolve a dispute over its manufacturing plant with the U.S. Food and Drug Administration, and the Justice Department that may block sale of its generic version because of a dispute over a previous fine.

To contact the reporters on this story: Drew Armstrong in Washington at darmstrong17@bloomberg.net; Molly Peterson in Washington at mpeterson9@bloomberg.net.

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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