On November 30, 2011, the first generic version of Lipitor® (atorvastatin) hit the market. A few months prior, my company asked me to write a letter to all the members in our Medicare Part D plans who were taking Pfizer’s top-selling cholesterol medicine. In the letter, I advised our members that less expensive generic versions of the drug would be soon be available. I also reminded them that not only do these generic drugs cost less than Lipitor, but copayments are also generally lower for generics than for brand-name drugs.
This is a no-brainer, I thought to myself. Everyone is going to take advantage of this savings opportunity, provided their doctors say it’s okay to switch to the generic.
I was wrong.
I just found out that less than 3 percent of the members who received this letter switched to a generic version of Lipitor. I find this very surprising.
Brand-name drugs, especially “blockbuster drugs” like Lipitor and Plavix®, are often a lot more expensive than generic drugs. And if pricing trends from 2011 to 2012 are any indication, I wouldn’t expect prices on brand-name drugs to come down anytime soon.
According to an Express Scripts report based on 2012 drug claims data, prices for brands increased 13.3 percent while generic drug prices decreased by 21.9 percent. The report states that the price differences between brand-name and generic drugs is more than 35 percent, which is “the largest widening of brand and generic prices since Express Scripts began calculating its Prescription Price Index in 2008.”
Granted, Pfizer did make a lot of efforts to hold onto its customers–for example, they offered insured patients a discount card to get Lipitor for $4 a month–but I know Pfizer didn’t reach everyone, because about 97 percent of our members are still getting Lipitor through their Medicare Part D plan. So about 97 percent of our members are not only paying more than they need to, but they are also approaching the Coverage Gap stage of their benefit a lot faster than those beneficiaries who switched to the generic drug.
Let’s compare Mr. Smith’s costs for Lipitor with Mrs. Johnson’s costs for the generic version of Lipitor as an example:
Mr. Smith always uses brand-name drugs
• During the Initial Coverage period, Mr. Smith has a 25 percent co-payment on brand-name drugs. He pays $32.25 for a 30-day supply of Lipitor. His plan pays the remainder, or $96.75.
• Mr. Smith always uses brand-name drugs, so he reaches the Coverage Gap in July. (Remember, it’s the total amount that both you and your plan pays that advances you to the Coverage Gap.)
• Now he has to fork over $61.25 for Lipitor (the full cost of the drug minus the
47.5 percent discount) for the rest of the year.
Mr. Smith’s total annual cost for Lipitor is $561.
Mrs. Johnson always uses generic drugs
•During the Initial Coverage period, Mrs. Johnson has a 25 percent co-payment on generic drugs. She pays $3.27 for a 30-day supply of atorvastatin, which is a generic version of Lipitor. Her plan pays the remainder, or $9.81.
• Mrs. Johnson always uses generic drugs whenever possible, so she never reaches the Coverage Gap.
Mrs. Johnson’s total annual cost for atorvastatin is $39.24.
I know I’d much rather pay $3.27 for a generic that’s just as safe and effective as a brand-name drug that costs 10 times more!
So is there anyone out there who can tell me why a large majority of Medicare beneficiaries are paying so much more than they have to for their medications? What am I missing? Surely not my brain!?