For years, Plavix and Lipitor, two of the most lucrative prescription medications in the history of the American drug market, have constituted quite a one-two punch.  Now, as Plavix loses its patent protection and Lipitor faces competition from multi-source generics, it's an important time for consumers and benefits managers to understand how the transition from brand to generic will affect drug prices going forward.

As Pharmacists United for Truth and Transparency explained on AARP's Inside E Street, Pfizer previously offered massive rebates to pharmacy benefits managers (PBMs), the third party administrators of prescription drug programs, to give preferential formulary treatment to brand name Lipitor.  In doing so, Pfizer and a number of PBMs kept brand name Lipitor profitable and expenses higher than needed for many employers and consumers.

PBMs readily accept manufacturer rebates since their opaque contracts with employers often allow the PBM to keep a majority of the rebates as profit while passing only a small portion onto the employer.  PBMs are notorious for crafting contracts that grant themselves maximum financial flexibility and make employers vulnerable to overpaying for prescription drugs.