MERCK SELLING ZOCOR CHEAPER THAN GENERICS

A bidding war maysoon be under waywith Merck's pricingstrategy for its off-patentblockbustercholesterol drugZocor (simvastatin).For the next 6months, Merck haslowered the drug'sprice to competewith generic versions.The move may cause generics manufacturersto cut their prices even further to keep apresence in the market.

When Zocor's patent expired last month, 3generic manufacturers began their 6 monthsof exclusivity to market their own versions.Teva Pharmaceutical Industries has exclusiverights to market the 5-, 10-, 20, and 40-mgdoses of generic simvastatin. RanbaxyLaboratories has exclusive rights to market the80-mg dose, while Dr. Reddy's Laboratories hasan agreement with Merck to sell "authorized"generic simvastatin, with the drug maker sharingthe profits.

Some health plans, however, will encouragepatients to stay on Zocor. WellPoint Inc has anagreement with Merck to sell branded Zocor—and not the generic competition—through itsmail-order pharmacy service. The company willexclusively use the Merck drug and take ageneric copayment. UnitedHealth Group Inc hasmoved Zocor to the lowest-priced tier of its drugformulary, making its copay cheaper than for thegeneric alternatives.

On the other hand, Aetna Inc will switch togeneric simvastatin. The health insurer hadbeen in discussions with Merck over a possibleagreement similar to the deal withUnitedHealth. Instead, simvastatin generics willmove to the first tier of its drug formulary. Thattactic will help the company achieve its lowestnet-cost strategy.

Kaiser Permanente also made the switch fromthe branded drug to the generic. Dale Kramer,director of purchasing, said that Merck "offeredus a very good price, but we were able to negotiatespecial pricing with Ranbaxy and Teva." Hebelieves that, after the 6 months are up andother companies can sell generic simvastatin,"the bottom will fall out of the market."