The Generic Wave Arrives

There has been a significant amount of chatter for the better part of the last 2 years regarding the new wave of generics coming to market. Widely utilized medications such as Lipitor (atorvastatin) and Plavix are often discussed. The patent for Lipitor—one of the most popular medications in history—expires on November 30, 2011. How will the availability of generic atorvastatin affect plan design and the behavior of payers, providers, and healthcare consumers?

We have to remember that for the first 6 months there will be only 1 manufacturer; therefore, the cost of the drug will drop only marginally. The single-source manufacturing of the generic gives the brand manufacturer, Pfizer in this case, the opportunity to offer steep rebates to payers to maintain market share during this 6-month period. The question is whether payers will choose to continue to offer the brand drug at the present copayment/coinsurance amounts and wait to make the switch until more manufacturers enter the market, thereby creating a competitive environment with steep reductions in cost. This question arises each time a brand patent is lost and a new generic comes to market.

Although a number of drugs have lost their patent over the last several years, I do not remember this much focus on loss of a patent since 2006, when a generic version of Zocor was introduced. A number of payers will choose to hold off in moving their members or employees to the generic. The financials work in their favor because the net cost will either remain the same or go down depending on the contractual arrangement with Pfizer. This arrangement also gives Pfizer 6 more months of revenue as well as the opportunity to introduce the brand medication to a significant number of new patients just beginning their drug therapy.

I recently read a blog by George Van Antwerp where he stated that this activity is confusing to the patient.¹ I would agree with George. This option is confusing at best. Healthcare consumers are still often reluctant to utilize generics, especially patients whose condition has been well controlled with a brand drug. What message are we giving them about the brand when a generic becomes available? I also worry that many healthcare consumers wonder whether plans, pharmacy benefit managers, and employers make decisions based solely on cost and not on good medicine. What message will they hear regarding generic atorvastatin versus branded Lipitor?

I am not sure what the right answers are, but I do know that we need to think not only about the financial implications (which I understand are important) but also about the broader message that the decision conveys.

Lipitor is only the first of many medications that will lose its patent over the next few years. This scenario will play out a number of times. Therefore, benefit managers and payers need to really think through their choices. I would like to hear your thoughts on this matter.