Pfizer's Lipitor is viewed by Medicare prescription drug plans as a marketing tool with which to attract beneficiaries, U.S. Pharmaceuticals President Pat Kelly said on a second quarter earnings call July 20.

"Most of the plans, all of which we have been in serious negotiations with, have actually been asking us to make sure that Lipitor is available on their formulary for marketing purposes because that is going to be a primary attraction" for patients, he said.

"All of them are competing for us to give them Lipitor so that they can market that as one of their primary available offerings."

Pfizer's negotiations with drug plans appear to be one factor in the company's increasing optimism about the impact Medicare Rx will have on the firm's bottom line.

To date, Pfizer - along with most of its drug industry peers - has generally adopted a "wait and see" attitude on the Medicare benefit, advising investors to expect a "neutral" effect on business.

Pfizer CEO Hank McKinnell appeared more sanguine on the July earnings call, however, predicting that the additional business from the government program is likely to be a positive for the industry.

While McKinnell acknowledged it is still "too early to tell" what the exact impact will be, he added that "any time people get more access to modern medicine, that's a win for all of us."

"We're going to have to see the first quarter, second quarter enrollment numbers, but almost certainly this is a positive for the marketplace. There is more money coming into the market."

"We're going to see a very positive impact for everybody: patients, payors and providers," he added.

Pfizer included the ramp-up to Medicare Rx on its list of positive policy developments - including the appointment of Lester Crawford as the permanent FDA commissioner and moves to prevent Rx importation - to have come out of Washington in recent months.

The "basic premise" on Medicare Rx - "to let the marketplace work - seems to be proving out," General Counsel Jeff Kindler declared. "The fact that patients are going to have ample choice among plans indicates that the Medicare plan has passed its first, most important hurdle."

He pointed to Maine as one example of the choice Medicare beneficiaries will have: "Maine...[is] estimating they're going to have 10 to 12 plans available in that state alone."

CMS' recommendations for broad access is also a predictor of the Medicare Rx program's success, Kindler said; the agency "clearly recognizes the importance of broad access...to critical medications."

As an example, he pointed to CMS guidelines stating that drug plans should include the "majority" of products in six therapeutic categories, including mental health drugs and antiretrovirals (¹ Also see "Medicare Formularies Should Contain “Majority” Of Drugs In Six Classes" - Pink Sheet, 31 January, 2005., p. 15).

Pfizer also believes CMS is making progress toward a second hurdle: enrollment. "Awareness and support for the program is increasing. Recent evidence is that 58% of seniors are aware of the new prescription drug program, and are in favor of it," Kindler said.

In addition to steps CMS is taking to enroll patients, Pfizer is implementing its own program to educate Medicare beneficiaries about the drug program (see ² Also see "Pfizer Medicare Rx Outreach Gains Momentum With Share Card Network" - Pink Sheet, 25 July, 2005.).

Pfizer's decision to align its sales force to reflect the geography of the planned state-based Medicare prescription drug benefit regions illustrates the importance the company is placing on the drug benefit.

"Medicare will have regions in January. We want our sales force to match those regions," McKinnell told investors. As a result, "people are moving; we're changing districts." McKinnell first discussed the plans in April (³ Also see "Pfizer Sales Force Stays: Changes Include “Modest” Cuts, No Lay-Offs" - Pink Sheet, 11 April, 2005., p. 9).

Once complete, the sales force will emulate the plan regions established by the Centers for Medicare & Medicaid Services: 34 regions for prescription drug plans and 26 regions for Medicare Advantage.

The structure, expected to be in place by the end of August, also includes a reduction in the number of reps that will call on each physician, in response to concerns that offices were being inundated with sales calls.

Lipitor Is Medicare Rx Marketing Tool For Drug Plans, Pfizer Says

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