Express Scripts to Raise Cost for Lipitor

By THERESA AGOVINO

NEW YORK – Pharmacy benefit manager Express Scripts Inc. is recommending clients remove cholesterol-lowering drug Lipitor from their preferred drug lists next year to promote the use of a rival product, Zocor, which will become significantly cheaper in June when it loses patent protection.

The decision, which was made in August, hadn’t been publicized, the company said Tuesday. St. Louis-based Express Scripts is one of the nation’s largest pharmacy benefit managers.

Drugs on the preferred list have lower copayments than competing medicines, making them more attractive to consumers. Analysts had been anticipating attempts to foster use of generic Zocor as companies, unions and others who provide health benefits seek ways to shrink spiraling health care costs, but the question remains whether they will really affect Lipitor sales. Pfizer’s Lipitor is the world’s best selling drug with revenues of $10.86 billion last year.

Deutsche Bank analyst Barbara Ryan said she was “shocked by the move” because Lipitor is a better overall drug. “It seems pretty bold,” Ryan said. But she does expect the move and others like it to affect the drug’s sales although she isn’t sure by how much.

“The availability of generic versions of Zocor in June 2006 provide an historic cost-savings opportunity for clients and patients,” said Express Scripts in a statement. Typically, generic drugs are 50 percent to 60 percent cheaper than their brand name counterparts, and the anticholesterol drug class is the nation’s top drug class, accounting for 11 percent of all drug expenditures, according to Express Scripts.

A 1 percentage-point increase in generic use results in nearly a percentage point decrease in overall drug cost, said Express Scripts.

Zocor’s sales were $5.2 billion last year. Typically, drug revenues plummet when generics are introduced.

“I don’t think it will knock the floor out of Lipitor,” said Catherine Arnold, an analyst with Credit Suisse First Boston.

She said that will depend on how many providers adopt similar plans and how aggressive they are about promoting the generic drug. Another pharmacy benefit manager, Medco Health Solutions Inc., said it has no plans to remove Lipitor from its preferred drug list. Wellpoint Inc. has been letting doctors and patients know that generic Zocor is coming and will suspend copayments for those who use it for up to four months.

Arnold noted generic Zocor isn’t Lipitor’s only problem. It is also facing pressure from AstraZeneca PLC’s Crestor and Vytorin, which is made by a joint venture between Merck & Co. and Schering Plough Corp.

Pfizer Inc. didn’t have an immediate comment on the issue.