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In a bid to preserve its Lipitor market share in coming months, Pfizer has offered an unprecedented deal to the nation's largest prescription benefit managers. They can purchase Lipitor at below cost for the next 6 months.
The catch? Companies that accept the deal cannot fill prescriptions for generic Lipitor. Instead, scripts must be filled with the brand name drug.
Curious about the deal's finer details, the New York Times reports that Senators Max Baucus, Charles Grassley and Herb Kohl have now requested information from Pfizer and the pharmacy benefit management companies involved.
More specifically, Senator Kohl, the chairman of the Subcommittee on Antitrust, Competition Policy, and Consumer Rights, has expressed his concern that Pfizer is "manipulat[ing] the marketplace to prevent access to generic drugs."
It's not clear whether the plan violates U.S. competition laws, but it's quite possible that it does. Watson Pharmaceuticals is the only company currently approved to sell generic Lipitor. By selling Lipitor below cost, Pfizer is creating a high barrier to entry for Watson. That could negatively impact the company's ability to gain market share.
It could also force Watson to raise prices in a bid to offset any losses. This could make it tougher for Watson to compete with other generics, many of which are expected to hit the market in June. It could also raise the price of generic Lipitor across the board.
Though it might negatively impact consumers and employers, Pfizer's plan is not per se illegal. It's incredibly difficult to prove predatory pricing claims, and the above may be too speculative to support a Sherman Act allegation.
Still, it will be interesting to see whether Congress and consumer protection groups act. If accepted, Pfizer's generic Lipitor plan could very well change the way pharmaceutical companies react to expiring patents.
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