In a move likely to cause sharp price reductions for cholesterol-lowering drugs, the FDA gave approval for six more companies to launch generic copies of Merck’s Zocor (simvastatin). Analysts say the cheaper formulations could drive down prices for the generics as much as 70%.
The approvals could impact sales of Pfizer’s Lipitor (atorvastatin), whose prescriptions were off 6% in the fourth quarter as health plans encouraged patients to switch to generic Zocor, a Bear Stearns analyst noted in a recent research report.
Teva Pharmaceuticals and Ranbaxy Laboratories were the first to receive approval for their generic Zocor copies in June after the patent for simvastatin expired. That gave them a six-month exclusivity period, which expired Dec. 20. Teva has been selling its 20-mg. copy at an 8% discount to Merck’s branded drug of the same dose. Based on current prices at the Web site drugstore.com, a 70% reduction would lower the price for generic Zocor to $1.36.
Among the new firms to get approval are Dr. Reddy’s Laboratories and Sandoz, the generics unit of Novartis. The others are Cobalt Pharmaceuticals, Aurobindo Pharma, Zydus Pharmaceuticals and Perrigo. The FDA also gave regulatory clearance for Ivax, a unit of Teva and Ranbaxy, to make additional copies.
Despite the decline in the number of prescriptions, Lipitor sales increased 15% in the third quarter compared with a year earlier. The rise can be attributed to a Lipitor price hike coupled with lower discounts to the federal government under the Medicare Part D program and Pfizer efforts to encourage doctors to prescribe higher, more expensive doses, Bloomberg News reported. As a way to boost revenue in 2007, Pfizer plans to tout studies showing patients taking Lipitor are less likely to have a heart attack or stroke than those on Zocor, Pfizer said in an October statement.
Meanwhile, due to generic erosion Zocor sales slid 65% to $371 million in the third quarter, compared with the year-ago period.
Studies have shown that competition can drive down a drug’s price. According to an FDA study released earlier this year based on an analysis of retail prices, the average generic price can drop by half the cost of the comparable brand-name drug when two competing generics come on the market. The average price was 80% lower than the comparable brand-name drug when nine generic firms were competing with each other.