Pfizer’s Latest Gambit for Keeping Lipitor Alive

Legend has it that the only way you can kill a vampire is by driving a stake through its heart. Pfizer’s (NYSE:PFE) cholesterol drug Lipitor has been a monster seller since it was launched in 1997, but it looks as though it’s going to take a lot more than a stake to kill off this blockbuster, if Pfizer has anything to say about it.

Yesterday, the  giant drugmaker pulled another surprise in its all-out offensive to preserve sales of brand-name Lipitor after the drug loses patent protection next week.

A Nov. 11 article on InvestorPlace described the novel steps the New York City-based pharma giant has taken to lessen the impact of generic competition on Lipitor, the best-selling drug of all time with cumulative revenues of more than $81 billion, according to IMS Health. One was a patent settlement with Ranbaxy Laboratories that kept generic Lipitor off the market in the U.S. in exchange for an earlier launch of copies in foreign markets. Others are co-pay cards that lower a patient’s cost for the drug, deals with drug-benefit plans to fill prescriptions with the brand-name Lipitor instead of generic copies and, potentially, gaining over-the-counter status for the drug.

Pfizer’s refusal to let go of Lipitor haven’t exactly endeared the company to many in the industry, who contend the preservation plans run contrary to cost-containment efforts. In the case of the Ranbaxy patent settlement, California pharmacies are suing Pfizer.

Now, Pfizer is taking an unprecedented step to prevent Lipitor from succumbing to generic oblivion. The company announced Tuesday that it’s partnering with Diplomat Specialty Pharmacy in Flint, Mich., to mail Lipitor to patients who order the pills directly through the pharmacy. Diplomat would bill the patients’ health plans. Those plans that have contracted with Pfizer would pay a generic price for Lipitor, while plans that didn’t would pay a higher price.

“They are setting up a Pfizer pharmacy, if you will,” said Everett Neville, vice president of pharmaceutical strategy and contracting at Express Scripts (NASDAQ:ESRX) in a Wall Street Journal article. That’s something no pharmaceutical company “has done to date,” he added.

Some think selling pills directly to patients at generic prices is risky business. But if the step is successful, other pharma companies losing market exclusivity on their big-selling drugs could follow suit.

Ethical or not, Pfizer’s efforts are going to enable the company to squeeze a lot more out of Lipitor. In the past, most drugmakers simply accepted the migration of patients to the generic versions of their treatments.

Even off-patent, Lipitor should bring Pfizer nearly $4 billion in sales worldwide in 2012. That’s a healthy decline from the $13 billion the drug generated in its heyday, but it would still make Lipitor one of Pfizer’s top-five selling products, according to Credit Suisse analyst Catherine Arnold.

In addition to going down in pharma history as the best-selling drug of all time, Lipitor also seems destined to also be known as the product that refused to die.

As of this writing, Barry Cohen is long PFE.

Article printed from InvestorPlace Media,

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