Patent Expires On Best Selling Drug of All Time

Hugh Pickens writes "The U.S. patent has just expired on Lipitor, the best-selling drug of all time, as the first generic versions go on sale, marking the end of a brand that has dominated the drug industry, lowered the cholesterol of tens of millions of patients, and generated $10.7 billion last year in annual sales. But drug manufacturer Pfizer, dependent on Lipitor for almost one-fifth of the company's revenue, does not intend to go down without a fight. Pfizer is employing unprecedented tactics to hold onto as many Lipitor prescriptions as it can with an aggressive marketing plan and forging deals with insurers, pharmacy benefit managers and patients to meet or beat the price of its generic replacements because even at the lower price, Pfizer has a huge profit margin because of the relatively low cost of materials for Lipitor. Some deals require pharmacies to reject prescriptions for low-cost generics and substitute a discounted name-brand Lipitor while other deals block generic makers from mail-order services that account for an estimated 40 percent of all Lipitor prescriptions. 'Pfizer's tactic of dressing up as a generics company is pulling the rug under the incentive system created to foster the development of generic drugs,' says attorney David A. Balto."

Comments

See. Patents/Copyright spur innovation.

[unity100]

My ass. you grant a monopoly to someone. That someone gets big on that monopoly. You think that they would just let it go when patent expires ? think again. has music industry let it go with copyrights ? no, they are trying to extend it to 120 years now. pfizer is just another example. bad example though - they could just lobby beforehand and try to extend patent durations, like music industry does with copyrights.

Re:See. Patents/Copyright spur innovation.

[geekoid]

Yes, they do. Being able to get sole rightrs on the drug is why tneya re invented. It can cost mollions of dollars.

And this article is much ado about nothing. Patent is expiring, company ups advertising and lowers price.

BFD

Re:See. Patents/Copyright spur innovation.

[bky1701]

More often than not, they are "invented" based on research done at universities; including publicly funded ones. We should be cutting the middle-man and funding those projects more, rather than creating artificial property to encourage corporations to "invent" drugs.

Re:See. Patents/Copyright spur innovation.

[Anonymous Coward]

It's not a patent problem it's an anti-trust problem. Please adjust your 'fixit' suggestions accordingly.

Re:See. Patents/Copyright spur innovation.

[demonlapin]

This bears only the most tenuous connection to the truth. Yes, the cholesterol synthesis pathway came out of a lot of university research. HMG-CoA reductase is a critical enzyme. There are a lot of compounds that will inhibit enzymes in vitro; the vast majority are utterly unsuited to use as anything but research compounds because they aren't safe, can't be made into an orally bioavailable form, have bad kinetics, or any of a thousand other things that can sink a potential drug.

Drugs come from... drug companies, not from universities, because drug companies have the billions of dollars to put a compound through clinical trials and the expertise to make the drugs usable.

Re:See. Patents/Copyright spur innovation.

[shutdown -p now]

If they want to outbid generics on price, nothing's wrong with that. But those agreements mentioned in TFS, where pharmacies must only prescribe their offering - that sounds rather anti-competitive to me.

Re:See. Patents/Copyright spur innovation.

[aurispector]

Patents by design grant a TEMPORARY monopoly to cover the cost of R&D and to provide incentive for companies to actually do the R& D in the first place.

The problem with the drug industry is that in order to comply with the regulatory quagmire that is the FDA, they have to disclose essential details about their work publicly long before it can go to market. Hence patents must be acquired long before the drug can make any money. These days drugs cost literally billions of dollars to develop. Burning patent life during the R&D time robs the companies of profits they would have earned, driving up costs for the consumer as they must raise prices in order to recoup R&D expenses in the shortened time the product is on the market under patent. Remember, these drugs save lives and directly improve the quality of life for potentially billions of people. These same people will eventually get reduced cost access to the drug when it goes generic off patent.

Contrast this with the entertainment industry: Anyone can pen an idiotic ditty for virtually nothing, in basically no time at all. The product merely provides people with fleeting, momentary amusement. No lives are saved, no diseases cured. Even the biggest, most expensive blockbuster movie costs a fraction of what it cost to bring lipitor to market..

Now unless you're an idiotic, dirty, lazy hippie who thinks everything should be free, you will have to admit that unless people are going to get paid, there is no way they are going to spend all that time and effort on drug development even if the end result means lives are saved. After all they have mouths to feed, mortgages to pay, etc, and the pharmaceutical industry is one of the few areas left in the US consistently providing high paying jobs to smart, motivated and educated people.

Turns out the profit motive is a terrific way to get people to do useful things. Who'da thunk that people were willing to work so hard in order to get ahead. Amazing, isn't it?

Re:See. Patents/Copyright spur innovation.

[Anonymous Coward]

You don't need patents to commercialize medicine. With the exception of clinical trials, everything could be done in a free market just as well (and did; aspirin was invented in Germany but couldn't be patented there; in fact in the early part of the 20th century, before Germany and France allowed drug and chemical patents, they were the center of innovation in those fields.)

Clinical trials are like a public good, and all things told society would maximize its wealth by ditching patents and funding clinical trials with taxes. A very good read on the myths of copyright and patents is "Against Intellectual Monopoly".

Re:See. Patents/Copyright spur innovation.

[MobileTatsu-NJG]

You are just on your knees (a very comfortable position for a fanboi though). ... And to the serial downmodding assholes...

*Smirk*

You remind me of a friend I had that wrote me a three page email about how carpal tunnel was killing him.

Re:See. Patents/Copyright spur innovation.

[tsotha]

Nope. Drug targets come out of universities. But drug targets are a dime a dozen. The real expense is in clinical trials, and that is paid by drug companies in almost all cases. When the cost is shared the university gets part of the patent.

Re:See. Patents/Copyright spur innovation.

[msauve]

Most states have laws which require pharmacies to dispense less expensive generics, if requested. Some even require it:

Whenever a pharmacist receives a prescription for a brand name drug, the pharmacist shall substitute a less expensive generically equivalent drug unless requested otherwise by the purchaser or indicated otherwise by the prescriber.

- Pennsylvania, for instance.

Re:See. Patents/Copyright spur innovation.

[Jah-Wren Ryel]

Drugs come from... drug companies, not from universities, because drug companies have the billions of dollars to put a compound through clinical trials and the expertise to make the drugs usable.

And don't forget, they've got twice as much money for advertising those drugs as they have for researching those drugs and running those clinical trials.

Re:See. Patents/Copyright spur innovation.

[blakelarson]

A drug trial can literally run more than $10M easily. Are you telling me that a government should fund every companies clinical trial at $10M a pop? Don't clinical research orgs. stand to make a *lot* of money off of that? Or should the government decide who gets this clinical trial money? Not sure if you know this, but the government isn't always the best judge of which companies / ideas to support.

Re:See. Patents/Copyright spur innovation.

[Obfuscant]

If Pfizer still has a big profit margin after the patent has expired, why wouldn't they have invented anyway?

Because the costs of manufacturing a drug once it has been created and approved are much less than the costs of developing one. They will still have a good profit margin TODAY because the costs of designing and testing the hundreds of potential candidates they went through to get to a final, working drug were paid off during the patent period.

They wouldn't have a profit margin if they had to sell the drug from day one at the same price as those people who are going to manufacture the generics now.

Developing drugs is a risk. You can get all the way to trials and then find out that your fancy new LDL drug gives 50% of the people who take it the hives or only works in 3% of the users. All the money you spent getting there is gone. People who fund that kind of risk deserve to get paid back for taking the risk, mostly because they won't take the risk unless they do.

Re:See. Patents/Copyright spur innovation.

[MightyYar]

I'll give you an example. A coal power plant sets up shop on the east coast of the US. It has no pollution controls at all, because this is pure capitalism in this example and the government doesn't require any. Prevailing winds are westerly, so all the pollution blows out to sea and no one gets sick and no one sues. Problem is, all that mercury is getting into the fish. It's impossible for anyone to prove this to a jury and sue that particular plant, so it just continues. Even if they could prove that, statistically, the plant was responsible for some of the mercury - they still would have a heck of a time proving harm. Capitalism will never solve this problem.

Another is food. Capitalism always has cycles of shortages and gluts. A shortage of hard drives because of a flood in Thailand is one thing, a shortage of food is quite another. Capitalism will never solve this problem, because constantly producing a glut of food would drive farmers out of business which of course leads to a shortage. One solution is for the government to come in and buy the glut and then destroy it - unless of course there is no glut! Then you get to use the food and thank the usually wasteful food program. Not the only solution, but it's a common one. The point is, capitalism won't work on it's own when it comes to staple foods.

Re:See. Patents/Copyright spur innovation.

[Anonymous Coward]

Drugs come from... drug companies, not from universities, because drug companies have the billions of dollars to put a compound through clinical trials and the expertise to make the drugs usable.

And don't forget, they've got twice as much money for advertising those drugs as they have for researching those drugs and running those clinical trials.

Actually, I sold my Pfizer stock long ago, because in an era where medicine's costs are skyrocketing, share value remained pretty much flat. Or dropped.

After a while I noticed that the REAL drug development seemed to come out of small companies. Big Pharma (Pfizer and friends) were more interested in buying them out than in actual productive work of their own.

Liptor is the Drug From Hell as far as drug companies are concerned. Every attempt to replace it with something with a newer patent has exploded in their faces, as all the Lipitor "improvements" have been pretty darned dangerous, whereas Lipitor is fairly safe for most people.

Re:See. Patents/Copyright spur innovation.

[pz]

That's a nice Hollywood-inspired vision you have there.

Reality is that research costs money. A lot of money. Being passionate and driven, in the Hollywood sense, is largely irrelevant because that does not get you research dollars. Money for health-related research comes from the NIH, and only the NIH, to first approximation. Yes, there are other sources, but the NIH dwarfs them all. Sure, an extraordinarily motivated researcher might be able to convince George Soros to give him a few million dollars to pursue a multi-year plan on a new drug target, but that's the Hollywood fantasy again. The vast majority of biology researchers get their money from the standard NIH grant mechanism called an R01 (pronounced ARR-OH-ONE). That would be your tax dollars at work.

As another poster pointed out, that's only the first step. A drug target has been identified by university research. Now, the hard part begins where multiple animal models are tested in large scale, followed by Phase I clinical trials with a small cohort to demonstrate that the drug causes no harm, then Phase II trials with a slightly larger cohort to determine effective doses, then, perhaps, another animal study or two because the results didn't work as well as anticipated in humans, followed by Phase I again on a reformulated drug, then more research to figure out why there were horrible side-effects, back to Phase I, then Phase II, and, if the developer is lucky, Phase III. We're talking years after the initial discovery now, with lots of hospital costs, lots of salaries, and *then* the legal stuff starts with the FDA to get approval for general release. Next, lobbying starts on the insurance companies, especially Medicare and Medicaid, to cover treatment with the drug.

Put it this way, there is an entire industry focused specifically on clinical trials, and most drug candidates don't make it through. Because we've set the bar so high to get a drug approved, and the success rate is so low, there must be substantial reward for many people to justify the expense. One researcher having a dream is not enough, despite what Hollywood would have you believe.

Re:See. Patents/Copyright spur innovation.

[Reziac]

They may also outcompete on patient satisfaction.

Generics don't necessarily equate (nor do branded versions), and both for that reason and physician inertia, the prescription market tends to be slow to shift. Here's an example:

http://www.citizen.org/Page.aspx?pid=3106

As to why they don't equate -- even when the active ingredient is identical, the various binders and excipients can greatly differ, and that can mean that some patients only do well on a specific brand. This can be particularly critical with drugs that are prescribed in very low doses (micrograms) or that tend to degrade very rapidly.

I was just reading a study on that the other day (can't find it again offhand but it was in NEJM) -- for one commonly-prescribed drug, results were radically different depending on the binder -- from 18% to 90%. This can result in nominally-identical drugs not being bioequivalent (and the FDA has a rating system for bioequivalence).

[BTW as it turned out, the cheap old-fashioned sugar-based binders performed best.]

Re:See. Patents/Copyright spur innovation.

[crunchygranola]

Not really. Everybody acts like sales and marketing are unimportant details. They are not. Products do not sell themselves, and no amount of disliking sales and marketing people is going to change that. Companies that ditch their highly-paid sales staff (some of whom will outearn the CEO/founder, especially in small companies) quickly find this out.

This response is completely upside-down: taking a serious problem that "free market fundamentalists" have created in the U.S., and treating it as if it is not only normal, but also inevitable and really a GOOD thing!

The fact that the U.S. dropped restrictions on drug companies on marketing prescription drugs directly to the public, thus becoming the only country in the world that allows it, is part of the reason that the cost of medicine in the U.S. has exploded.

The enormous ad expenditures are for direct marketing to the public. Except for the very safe drugs for commonplace ailments that are sold OTC public is not qualified to make judgments about the drugs they should take. Honest. They aren't. Doctors are paid to have that expertise. We don't need direct marketing to the public. No other nation needs it. Big Pharma didn't use to need it. But doctors they aren't immune to the pressure from their patients - nor are they completely immune to the absolutely fact-free, emotion-laden content of ads which they also see constantly (there used to be much stronger restrictions also on how Big Pharma could seek to debase the judgment of doctors directly - through perks that are just dressed-up kick-backs for prescribing costly drugs). None of this is necessary to practice good medicine - it undermines it in fact.

A classic recent example of how the marketing game is the drug Prilosec -- pushed incessantly by its patent holder until the day the patent expired. The next day no comment of this worthy drug could be found, now it was a new patented replacement virtually identical in effects called Nexium. Trying to push the now inexpensive generic Prilosec out of the public's (and doctor's) mind and replacing it with the needlessly costly Nexium did no benefit to the public or medicine. It was an ad campaign solely designed to keep medical costs high.

Yeah. We need lots more of that.

What?

[geekoid]

A patent is going to expire. The company responds with marketing and by lowering it's price.

That's just horrid~ Someone is working to hard to find ills.

What's that? there are going to create a generic version of the drug they created? OMG!!1!!!

Re:What?

[iluvcapra]

The company responds with marketing and by lowering it's price.

Right, but they're not lowering their price as much as the generic. They're negotiating deals with your insurance company so your co-pay for the name brand will be lower than generics, even though the rate the insurance company actually pays for brand-name Lipitor would be higher than the generic, so you save $5 on a copay but the insurance risk pool loses $50, because the drug company is insulating you from the underlying costs and distorting your buying decision.

It's classic drug company tactic- they'll hand out "coupons" or "drug benefit cards" that defray the excess cost of a brand-name copay over a generic copay, so if your brand-name copay on a drug is $40 and the generic is $15, Pfizer will pay you the $25 difference to buy the brand name. They can afford the difference because they're probably profiting over $100 on the bottle, you just don't see the cost to your insurance company at the point-of-sale, it gets turned into higher premiums. It's a big part of why prescription drug insurance is so expensive in the US, several states have banned manufacturer drug coupons and This American Life did a whole episode on it a year or two ago.

In other news

[blair1q]

Today Pfizer announced results of a new study showing that cholesterol has nothing to do with any health problems whatsoever, but water can kill you. Simultaneously they announced the start of trials of a new drug to control this menace, tentatively named hydroprofitor.

Patent vs Copyright

[Dan East]

So, if congress has been able to withstand the lobbying for indefinite patents, given the massive amount of money on the line as indicated by this single drug patent, how come they fold to the likes of Disney when it comes to copyright? Maybe it's the cuteness of the cartoon characters.

Re:Choosing the correct tactics

[MightyMartian]

I'm unclear here. Since when did pharmacists suddenly get the right to override a doctor's prescription? How can Pfizer actually get a pharmacist to sign an exclusivity agreement.

Pfizer did not discover Lipitor...

[Anonymous Coward]

Pfizer did not discover or invent Lipitor. Lipitor was discovered and invented by Warner Lambert/Parke-Davis in Ann Arbor, Michigan, in an industrial setting, not academic. Warner Lambert/Parke-Davis partnered with Pfizer to develop and market the drug and share the profits. From the profits of Lipitor alone, Pfizer was able to buy and takeover Warner Lambert/Parke-Davis, where it closed the Ann Arbor site a few years later in 2007 (http://www.youtube.com/watch?v=02krhNFfEq4). Of the 2200 scientists at the Ann Arbor site, approximately 600 remained with the company, of which approximately 300 relocated to Groton, CT, Pfizer's legacy discovery research site. The other 300 scientists relocated to sites in St. Louis, MO (winding down and eventually closing), La Jolla, CA, and Sandwich, England (now in the process of closing - over 2000 jobs lost). In these relocations, Pfizer was very generous and bought families homes for the original price and paid to relocate employees and their families across the world. Pharmaceutical site closures are very expensive and impact families and disrupt local economies significantly; purchasing employees homes is an incentive to retain talent. Pfizer assisted employees buy new homes by paying for real estate agents and paying closing costs on homes. In 2009, Pfizer bought Wyeth Laboratories and laid-off tens-of-thousands of scientists, many of them from Ann Arbor, MI, its most successful discovery research site ever based on the site talent, technology, and number of marketed drugs from that site, Groton, CT, and many from Wyeth various sites in the U.S. Several years ago, Pfizer was able to reduce the cost of manufacture of Lipitor more than 200-fold using a series of natural wildtype and industrially modified enzymes.

Pfizer's former CEO Jeffrey B. Kindler and former CEO of McDonalds, became so unpopular with the rank-and-file that he earned two nick-names, first "McBurger," and finally and more commonly known as "CLOWN SHOES" (http://www.youtube.com/watch?v=clgRId8x0ZM). Employees would and still post about dissatisfaction with the company's direction and leadership on BioFind.com (http://biofind.com/rumor).