Coupons aim to keep people off generic drugs

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TRENTON, N.J. (AP) — If brand-name prescription medicines cost you as little as generic pills, which would you choose? A few drugmakers are betting Americans will stick with the name they know.

They’ve begun offering U.S. patients coupons to reduce copayments on brand-name medicines and compete with new generic versions of the drugs. The medicines include staples in the American medicine cabinet — cholesterol fighter Lipitor, blood thinner Plavix and blood pressure drug Diovan — along with drugs for depression and breast cancer.

Pfizer Inc. tested the new trend last year and now offers copay coupons that can bring insured patients six of its medicines for as little as $4 a month each. That includes Lipitor, which was taken by more than 3.5 million Americans until generic competition arrived last Nov. 30.

Experts predict more drugmakers will do the same for some of their big sellers, as the companies weather big revenue drops from an unprecedented wave of top-selling drugs whose patents are expiring. The trend is the latest attempt by drugmakers to hold onto business at a time when they are increasingly under siege. Drug companies including Pfizer, Merck & Co. and Bristol Myers-Squibb Co. are squeezed by rising research costs, the weak global economy and pressure from Europe, China and elsewhere to reduce drug prices.

Developing drugs is expensive, requiring up to a decade of laboratory research and then patient testing, costing $1 billion or more, to win government approval to sell a drug. In return, the drug’s maker gets the exclusive right to sell the drug for about 10 to 15 years, until the patent expires. That allows the companies to recoup those costs and hopefully turn a profit.

After that, generic copycats sold by other companies flood the market, costing just a fraction of the brand-name drug’s price, even though they’re chemically identical. Nearly all patients switch to a generic.

Lipitor, once the world’s top-selling drug, provides a window into the use of coupons.

A month’s supply of brand-name Lipitor costs about costs about $175 without insurance. For insured patients, the copayment is typically $25 to $50, well above the average copayment of about $10 a month for most generic drugs.

Under Pfizer’s Lipitor For You coupon program, Pfizer absorbs up to $75 of the patient’s out-of-pocket cost. Insured patients pay only $4 a month, unless their copayment is higher than $79 a month. Uninsured patients get the $75 off each prescription and then pay the remaining $100 or so.

While the deal slashes Pfizer’s profit, the company still makes more money than it would if all its customers defected from Lipitor to a generic. Ian Read, CEO of New York-based Pfizer, recently said the strategy on Lipitor alone brought the company hundreds of millions of dollars in extra profit.

The coupons only work with private insurance, though. Patients with Medicare or other government health insurance are barred from using them.

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