Health Care and Eli Lilly and Co. and Health Care Businesses and Health Care & Life Sciences and Health Care & Insurance and Pharmaceutical

Drugmakers, pharmacists at odds

November 28, 2011

Eli Lilly and Co. and its peers are increasingly clashing with pharmacies in an effort to keep patients buying their brand-name drugs.

Indianapolis-based Lilly recently rejected CVS Caremark’s demands for big price discounts on its insulins, Humalog and Humulin, according to The Wall Street Journal. In response, CVS kicked Lilly’s insulins off the list of medicines it recommends to the employers and health plans for which CVS acts as a pharmacy benefits manager.

Being off the list could prompt CVS’s clients not to cover Lilly’s insulins, because they would get a smaller rebate on the drugs, the Journal reported. CVS said customers could get insulins made by Novo Nordisk A/S for less money.

"In light of the aggressive pricing required to win this business—and the fact that only a small percentage of Lilly's insulin franchise would be impacted by this change—we ultimately decided it did not make good business sense for Lilly to be included," Lilly officials said in a statement.

Last year, Lilly underbid Denmark-based Novo Nordisk to win an exclusive contract to provide the insulins sold by Wal-Mart Stores Inc. under its ReliOn brand name.

In another battle that could set a precedent for the industry, New York-based Pfizer Inc. has tapped an outside firm to set up a mail-order pharmacy so it can sell the cholesterol drug Lipitor directly to consumers.

Even thought Lipitor loses patent protection in the United States on Wednesday, Pfizer will offer the drug at a price that has a similar co-pay to its new generic competitor, atorvastatin. Some pharmacy benefit mangers, such as New Jersey-based Medco Health Solutions, have agreed to lower Lipitor co-payments to the price of a generic and reject claims for atorvastatin.

"Previously, Big Pharma has tended to walk away" from top-selling drugs once they lose patent protection, Pfizer CEO Ian Read told the Journal. "Now, we have a flat-out different culture."

If Pfizer’s plan retains even a fraction of Lipitor’s $13 billion per year in worldwide sales, it may prompt other companies facing giant patent expirations—which would include Lilly—to follow suit.

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