Pharmacies Accuse Pfizer of Fixing Generic Lipitor Prices
SAN FRANCISCO (CN) - In a federal antitrust complaint, 11 California pharmacies say Pfizer and generic drugmaker Ranbaxy are illegally keeping a generic version of the blockbuster cholesterol drug Lipitor off the U.S. market.
The pharmacies' attorney Joseph Alioto called it "an extraordinary rip-off by the largest pharmaceutical company in the U.S. and the largest generic manufacturer in India."
Lead plaintiff Chimes Pharmacy claims that after a patent dispute, Pfizer and Ranbaxy agreed to artificially extend Pfizer's Lipitor patents, previously set to expire in March 2010, until Nov. 30 this year, when Ranbaxy will get a "risk-free" 180-day monopoly on the generic version. The pharmacies say Ranbaxy and Pfizer also made a deal to fix the price of the generic version at just slightly less than Pfizer's price.
The industry defines a blockbuster drug as one that brings in more than $1 billion in revenue. Lipitor sales exceed $1 billion a month. The complaint calls it "the best-selling drug in the history of the pharmaceutical business."
"By delaying Ranbaxy's generic version of Lipitor in the United States - which would have been lawfully sold as early as March 24, 2010 - Pfizer obtained extra time for the exclusive sales of Lipitor, totaling extra sales of Lipitor of approximately $18 billion dollars, which they would not have sold in the absence of the unlawful agreement with Ranbaxy. In return, Ranbaxy will be able to distribute a generic substitute for Lipitor earlier in foreign markets than it otherwise would have been able to do, reaping substantial profits it otherwise would not have gained," the complaint states.
It continues: "the agreement by defendants denies purchasers' access to a generic substitute to Lipitor in the United States for up to 20 months after the expiration of the active ingredient patent for Lipitor. Lipitor's current price exceeds $4 a day, while a generic version will sell for between $0.25-$0.35 and even as low as $0.10. Consequently, Lipitor purchasers in the United States are paying now, and will continue to pay, inflated prices for this life-saving pharmaceutical at least through May of 2012."
The complaint says the conspiracy "eliminated" generic competition to Lipitor, and made U.S. consumers pay 1,200 percent more for the drug than if a generic version were available. It claims 16 million Americans take Lipitor every day.
"It's an extraordinary rip-off by the largest pharmaceutical company in the U.S. and the largest generic manufacturer in India," the pharmacies' attorney Joseph Alioto in a Monday interview with Courthouse News.
"Pfizer's CEO was under intense pressure because the patents were running out. This was an act of desperation, as usually happens with antitrust violations, but it should have been known by Pfizer and by its chairman and certainly by Ranbaxy that what they were doing was against the law. But frankly they didn't care."
Alito said Pfizer CEO Henry McKinnell acknowledged in his 2005 book "A Call to Action," that the Lipitor patents would expire in June 2011, and later recognized that Pfizer would lose billions if it allowed Ranbaxy to introduce a generic version of Lipitor that costs 34 cents a pill. Lipitor brings in more than $1 billion a month in revenue for Pfizer, accounting for 29 to 30 percent of the company's profits since 2006, according to the complaint.
"Ranbaxy will launch Lipitor generic in the American market in November 2011, risk-free with 180-day exclusivity and an agreement with Pfizer that it will price its generic at or slightly less than the Pfizer price," the complaint states.
Alioto called the Pfizer-Ranbaxy agreement "a commercial bribe," adding, "You cannot extend a patent."
Alioto said: "There are 16 million Americans who take this pill every day. On that basis they are selling $50 million worth of Lipitor every day when it should be about $5 million."
For Alioto, the lawsuit speaks to broader issues of health-care costs for Americans.
"It comes at a time when the United States is struggling over health-care issues, which is causing a lot of tension among the people because of the ramifications of it, and right in the middle of it you have this extraordinary scam by these very powerful people," Alioto said.
The pharmacies seek a court order nullifying the Pfizer-Ranbaxy agreement. They also seek damages equal to the difference between what Lipitor sold for without the generic and the price it would have been with competition, had a generic entered the market in March 2010.