Pfizer faces a daunting task because generic Zocor is now sold by 11 companies, and that means intense price competition. Customers of course find the idea of paying less hard to resist.
A recent Bear Stearns report says the annual wholesale acquisition cost for generic Zocor is $20 to $58 depending on the dose. The annual cost for Lipitor is $874 to $1,246. The wholesale acquisition cost is the list price charged by drugmakers to wholesalers or direct purchasers, excluding discounts or rebates. Meanwhile, the annual cost is $913 for Zetia, $983 for Vytorin and $945 for Crestor.
Pfizer has two ways to defend Lipitor. It can cut prices and offer rebates to protect its prescription-market share, or it can raise prices to prop up revenue as prescriptions slip.
For now, it's doing both. In January, it raised Lipitor's price by 5%, and Pfizer attributed its first-quarter sales gain from the product to the price hike.On May 30, it also signed a deal with Express Scripts, (ESRX) to offer rebates on Lipitor. In return, the giant pharmacy benefits management firm placed Lipitor back on its list of preferred brand-name drugs, meaning its customers will pay less out of pocket. Managed care firms usually have three tiers of products. Generics, which require the lowest copayments, are in Tier 1. Preferred brand-name drugs are in Tier 2, and nonpreferred drugs are in Tier 3 and carry the highest copayments.