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WellPoint To Cease Branded Lipitor Coverage, Favor Generics

By Jon Kamp Of DOW JONES NEWSWIRES Health-insurer WellPoint Inc. (WLP) is planning to stop covering Pfizer Inc.'s (PFE) Lipitor cholesterol-lowering pills for millions of members in favor of generic versions, marking a new challenge to Pfizer's efforts to fend off generic competition to its best-selling drug. The move bolsters WellPoint's effort to encourage affected members to take a lower-priced generic, instead of paying a larger amount for Pfizer's branded Lipitor. WellPoint, one of the nation's largest managed-care firms, will make the change on April 1 for many commercial pharmacy-benefit members in 12 of the 14 states it serves. In the other two states--New York and California--the insurer will require members to try a generic first. The change reflects price pressures in the market for the drug, known generically as atorvastatin, where Watson Pharmaceuticals Inc. (WPI) is selling an authorized copy and Ranbaxy Laboratories Ltd. (500359.BY) is selling a generic version. Also, WellPoint is combating Pfizer's use of Lipitor discount cards that negate a co-payment tactic insurers often employ to encourage generics. "We're changing the prescription drug coverage benefit to help your employees save on drug costs without giving up quality," WellPoint said in a letter going out to clients on Thursday, which was reviewed by Dow Jones Newswires. "Beginning April 1, 2012, brand name Lipitor will no longer be covered" in some drug-benefit plans, the letter said. "Atorvastatin, the new, lower cost generic will continue to be covered." WellPoint plans to notify its clients' individual employees about the change as well. The change doesn't apply to WellPoint's commercial clients that use an outside firm to handle drug benefits for their health-plan members. WellPoint declined to disclose how many pharmacy-benefit members it currently has. Overall, the company's 34.3 million medical members as of Dec. 31 ranked a close second behind UnitedHealth Group Inc. (UNH). The Lipitor move "will apply to a large portion of our customer base," said Colleen Haines, staff vice president of clinical pharmacy services at WellPoint. Pfizer's blockbuster pill lost U.S. market exclusivity late last year. Generic Lipitor versions captured about 66% of the overall U.S. prescription volume for Lipitor and its generic equivalents in the week ended Jan. 27, the most recent week for which data were available, J.P. Morgan said in a research note this week, citing figures from data tracker IMS Health. Branded Lipitor's share has come down in recent weeks, though some analysts say it is still higher than what other big-selling drugs have achieved historically at similar points following loss of exclusivity. Pfizer noted that after drugs lose market exclusivity, it becomes very difficult for patients to maintain access to branded drugs due to cost pressures favoring generics. "In this environment, health plans and [benefit managers] will act in the best interest of their business, and as such, will determine how to cover Lipitor within their pharmacy benefits structure," Pfizer spokesman MacKay Jimeson said. But the drug maker also noted about one-third of current Lipitor patients would like to stick with the brand-name drug, and the company is working to help them maintain access. Pfizer's efforts include offering customers coupon cards that mean cheap co-payments at the pharmacy counter. The drug maker also reached discount deals with some health plans and drug-benefit firms to help defend Lipitor sales. UnitedHealth confirmed it maintains a formulary set-up that uses co-pay levels to favor branded Lipitor over generics. But some industry changes are underway. Pharmacy-benefit manager Express Scripts Inc. (ESRX) made an adjustment on Feb. 1 that raises out-of-pocket costs for some customers filling branded Lipitor prescriptions. At WellPoint, branded Lipitor was moved to "tier 3" for commercial pharmacy-benefit customers in early December, while the generic versions were tier 1. Levels can vary, but generic co-pays are usually around $10 to $15 while co-pays for branded drugs on the third tier can cost $30 to $50. Pfizer's $4 co-pay cards can negate the way this structure discourages use of brand-name drugs, however. WellPoint argues that because branded drugs typically cost insurers more behind the scenes, this can hurt members over time if their coverage becomes more costly. One potential defense for health plans is to stop covering the branded drug when there are generic alternatives. The use of co-pay cards was "one of the factors, among many," for WellPoint's upcoming Lipitor change, said Haines, from WellPoint's clinical pharmacy services business. WellPoint stressed that it's blocking coverage for a drug that has generic copies available at a low cost, meaning members' access to atorvastatin won't be affected. -By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com --Peter Loftus contributed to this article.

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