Brand-Name Lipitor at Generic Prices

You can usually save big by switching from a brand-name drug to a generic. But when Lipitor lost its patent late last year, the results were surprising. Manufacturer Pfizer had spent years negotiating deals with health plans to keep costs for its blockbuster cholesterol-lowering drug competitive with the generic alternative. Now, some users get Lipitor on the cheap. But what you pay for Lipitor and other popular off-patent drugs may vary depending on your health care plan.

When a generic is introduced, it typically sells for about 10% to 15% less than the average wholesale price for the brand-name drug. That held true when Lipitor came off-patent, says Jim Yocum, of DestinationRx, which creates drug-comparison tools for insurers and consumers. But if you have insurance, your out-of-pocket costs are based on the insurer’s pricing tier for the drug -- with the unusual twist that you might pay the same for Lipitor as you’d pay for the generic.

Most health plans have three tiers of drug pricing. You may pay $10 per month or 10% of the cost of drugs in Tier 1 (primarily generics), $20 per month or 40% in Tier 2 (preferred brand-name drugs), and $40 per month or 60% in Tier 3 (nonpreferred brand-name drugs). In 2011, most plans included Lipitor in Tier 2. Since then, many plans have switched it to Tier 1. Indications are that Pfizer has been using rebates to retain market share, says Yocum. Check the pricing for your own plan; some plans have moved Lipitor to Tier 3, making it more expensive.

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Drug companies are waiting to see whether Pfizer’s discounting can preserve Lipitor’s market share -- a key question as several other big-name drugs, including Lexapro, Plavix and Singulair, go off patent in the next few months. If you take a drug that is coming off patent, check your plan’s prices for the generic. Also check options for staying with the brand-name drug, including any rebates from the drug company.