Lipitor Patent Expires

Your Invention Guru today finds himself in the United States tropical paradise of Key West, Florida.  While looking out at the blue waters of the Atlantic Ocean and Gulf of Mexico blending together, my quest is to compose an InventionIdeasBlog. The temperature back at the office is 34° with snow flurries in the air.  On my balcony, it’s a breezy 75° with lots of sunshine.  This should be proof positive that your Invention Guru will make any sacrifice, face any peril to bring you insight into the world of inventions.

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The Lipitor patent, owned by Pfizer Pharmaceutical, expires on November 30, 2011.  Nothing lasts forever and forever for Lipitor patent rights ends today.*  Patents for drugs grant a monopoly to the owner for 20 years starting on the official filing date.  Patents cannot be renewed.  In those 20 years, companies need to get the patent issued, receive FDA approval, market the product, and hopefully earn back the cost of R&D to ultimately make a profit for their shareholders.

The vast majority of new drugs fail to overcome the necessary hurdles.  Getting a new drug patented and passed by the FDA takes many years and millions of dollars.  Then after all that, some unexpected side effect may force the drug off the market.  This was not the case with Lipitor – it was a big winner for Pfizer.

In simple terms, a patent is a bargain struck by the inventor with the government for a monopoly of a set number of years in return for allowing free use of the invention upon expiration of the patent.  It is a bargain that has served the United States well, dating back to 1790.

It will be a long time until there is another drug like Lipitor.  The king of the cholesterol fighting statin class, Lipitor was beneficial to those who needed the drug while grossing up to $14-billion dollars a year for Pfizer.  Even in the final patent rights year, Lipitor was a money maker bringing in $11-billion.  And best yet, after the R&D costs were paid off, Pfizer’s per pill cost was only a penny.  Thirty cents to produce a month’s worth for each prescription that retailed between $115.00 and $160.00, depending upon dosage.  It was not all net profit for Pfizer because marketing, packaging, advertising, shipping, and pharmacy wholesale costs had to be deducted. Nonetheless, Lipitor was in large part responsible for making Pfizer #1.

Because patents have a life span and don’t last forever, the expiration of the Lipitor patent could potentially mean the loss of one-sixth of Pfizer’s revenues with no replacements in the pipeline.  When drugs go off patent, generic producers are free to use the patent without paying royalties.  Generic drugs generally work equally well for most, but not all, people.  When generic alternative drugs hit the market, retail pharmacy prices drop about 25% initially and then gradually plunge down to about 80% off the original on patent price.

It is typical for the name brand to lose a lion’s share of the business to the generics when a drug like Lipitor comes off patent; however, this time Pfizer has developed a revolutionary marketing plan to retain a substantial portion of the business.  Pfizer’s plan is to offer patients a Co-Pay Card allowing Lipitor to be purchased for $4.00 retail.  Special pricing deals are also being struck with health insurance providers.  Pfizer’s new strategy should allow the “off patent” Lipitor to be nearly the same cost as the generic atorvastatin pills.  Although the big profits are gone for Pfizer, they are finding a way for Lipitor to continue saving lives while also making money for the company.

*  (Most patents filed since the summer of 1995 expire in 20 years after filing. Design patents expire 14 years after issuance.)