Healthy Skepticism Library item: 3494

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Hensley S.
Pfizer Struggles As Generics Pummel Its Drugs
Hartford Courant ( courant.com) 2006 Jan 6
http://www.courant.com/business/hc-pfizer.artjan06,0,2429494.story?coll=hc-headlines-business

Keywords:
Pfizer Lipitor Celebrex Viagra

Notes:

Ralph Faggotter’s Comments:

Sales of Pfizer’s Lipitor have slowed down but the company says-
“We think that’s a temporary slowdown, but we would like some confirmation of that.”

So how will Pfizer get sales onto an upward trajectory again?

Don’t be surprised if Pfizer researchers mysteriously ‘discover’ that Lipitor is superior to other statins and that this ‘new evidence’ gets wide publicity including an advertising campaign!
Or alternatively, dont be surprised if the upper limit of acceptable cholesterol readings gets mysteriously re-defined downwards so as to include more people in the ‘needing a statin’ category.
Or other ‘off label’ uses for Lipitor will be found and promoted.
There are many ways of increasing drug sales!

Full text:

Pfizer Struggles As Generics Pummel Its Drugs
January 6, 2006
By SCOTT HENSLEY, Wall Street Journal

Pfizer Inc., the world’s largest drug company, is struggling with a big problem: a growing campaign by employers and insurers to drive patients toward cheap generics.

Investors and the company have long known that generic copies would pummel several of Pfizer’s top drugs that are losing patent protection. But in a new twist, generic versions of competitors’ drugs are hurting sales of Pfizer drugs that are still patent-protected.

Licensing deals, acquisitions and the company’s own research have failed to produce enough products to pick up the slack.

Most critically, U.S. prescriptions for Pfizer’s cholesterol-buster Lipitor have stagnated, even though five years remain on the key patent covering the medicine. At Kaiser Permanente, a California health maintenance organization, fewer than 10 percent of patients on cholesterol-lowering drugs are getting Lipitor.

The result is trouble for the company that defined an era of heavily marketed pills for masses of patients.

In October, Pfizer, which has its research and development headquarters in the Groton-New London area in Connecticut, withdrew projections for 2006 and 2007, saying it lost a reasonable basis to make predictions.

Its share price hit an eight-year low last month before recovering somewhat after a court ruling affirmed Lipitor’s patent.

For years, even as rivals hedged their bets by developing high-priced specialty medicines and vaccines free from generic competition, Pfizer threw its energy into remedies for common ailments. Among them were Celebrex for pain, Zoloft for depression and Viagra for impotence. Its key weapon was marketing: television ads for the public and an army of sales representatives urging doctors to prescribe Pfizer pills.

Today, insurers and drug benefit managers are becoming adept at overcoming Pfizer’s marketing might. Massachusetts requires 131,000 state employees, retirees and dependents to try two other cholesterol pills before it will pay for Lipitor. Even if patients get Lipitor, they have to pay $40 a month as their share of the cost – compared with just $7 a month for a generic competitor.

Lipitor sales in the United States rose only 1 percent in the third quarter from the year-earlier period, even though prices were 5 percent higher.

For the first two months of the fourth quarter, U.S. Lipitor prescriptions fell 2.3 percent, compared with the same period a year earlier, according to NDCHealth, an Atlanta health care information firm. It remains the world’s best-selling drug, with $12 billion in annual sales.

Lipitor’s performance has put pressure on Pfizer’s chief executive, Henry McKinnell. “Our strategy is to survive this period, and survival is the right word,” McKinnell said in an interview.

Regarding Lipitor’s malaise, he said, “We think that’s a temporary slowdown, but we would like some confirmation of that.”

Pfizer’s board is keeping a close eye on McKinnell, 62, who has been CEO since 2001. About a half-dozen members listened in during his latest earnings conference call with analysts, one person familiar with the situation said. And at every board meeting, directors discuss where Pfizer will find new drugs, according to this person.

At the moment, however, the board is not ready to ax McKinnell before his planned 2008 exit date or order a major change of course, people familiar with the situation say.

“The board has known and management has known and the investment community has known for a long time that 2005 would be a challenging year,” said Pfizer’s lead director, Stanley O. Ikenberry, a former president of the University of Illinois.

He said the board is confident that Pfizer’s long-term investments in research will pay off.

Pfizer is responding to the immediate threat in the way it knows best – with lots of marketing. It is spending more to advertise Lipitor and courting employers with discounts on its drugs.

While other drug companies are slashing sales staff, Pfizer has made only small cuts through attrition and still has 9,000 salespeople in the United States. It says they’ll be needed later this year with a slew of expected approvals of new products by the Food and Drug Administration, including a potential breakthrough pill to help smokers kick the habit.

Pfizer’s pipeline has never looked better, McKinnell said. Still, he conceded, “We are not a growth company in the next couple of years.”

Pharmaceuticals became one of America’s biggest and most profitable industries, thanks largely to a series of huge sellers introduced in the late 1980s and 1990s.

Now many of those drugs are losing patent protection. Once that happens, brand-name pills eventually lose nearly all of their sales to generics, which are chemically identical.

Pfizer itself lost patent protection on its huge-selling antibiotic Zithromax in November, and will lose its antidepressant Zoloft this year and blood pressure pill Norvasc in 2007.

Generics now are building a critical mass. It’s possible to treat a range of common conditions without brand-name drugs. Sixty percent of prescriptions in the United States are filled with generics, compared with less than half in 2000, according to IMS Health.

As health care costs continue to climb and take a bite out of corporate profits, employers and insurers are seizing on this historic shift. They are increasingly demanding that patients start with a generic and switch to a brand only if they need to.

That approach damages brands that still have patent protection, in addition to those that have lost it. Forty-five percent of employer-based insurance plans used this “step therapy” for at least one drug category in 2004, up from 22 percent five years ago, according to a survey by the Pharmacy Benefit Management Institute.

The agency that administers benefits for Massachusetts state employees estimates that the use of step therapy in 11 disease categories saved $3.9 million on its $158 million prescription-drug bill in 2004.

The trend afflicts all of Pfizer’s top competitors, and the share prices of several are languishing far below peaks set in 1999-2001. Almost every company has had trouble discovering new mass-market pills to replace those going off-patent. Among the factors blamed for the research drought are the difficulty of topping existing drugs, tighter approval standards and big-company bureaucracy.

But Pfizer is in a particularly tough position because of its failure so far to develop new hits for specialty markets such as cancer, where rivals such as Novartis AG and Roche Holding AG are making big inroads.

Insurers have a tougher time restricting the use of these specialty drugs because there are fewer generics and the drugs often treat life-threatening conditions.

Pfizer has also taken a hit from questions about painkillers that arose after Merck & Co. withdrew Vioxx from the market in September 2004 over heart risks.

Sales of Pfizer’s Celebrex painkiller have fallen by more than half, and Pfizer had to withdraw a related drug, Bextra, from the market last April at the FDA’s request.

Although Celebrex works similarly to Vioxx, studies haven’t shown that it shares the same degree of heart-attack risk.