Merck to Slash Zocor Price

Merck & Co., one of the biggest drug makers, has a cholesterol problem. Its world-class statin, Zocor, came off-patent at midnight last night. That means generic versions of the drug (chemically the same and tested safe) can compete now, and three are expected to hit the market today. Generics usually sell for 30-50% less than the brand name drug. Merck decided to slash the price under insurance plans, making it effectively cheaper than the generics.

UnitedHealthGroup, according to the Wall Street Journal, cut a deal with Merck to place Zocor in its lower tier of approved drugs while the generics will be in the most expensive. Co-payments for Zocor will also drop from $25 to $10 per prescription. As a result, Merck will keep its market share, or much of it anyway. And Zocor will still be profitable according to analysts.

Carolyn Pritchard, a reporter for MSNBC’s “MarketWatch”, posted a report on MSNBC.Com that said, “Merck in April reported worldwide sales of Zocor of $1.06 billion in the first quarter, down 4% over the same period a year earlier due to the availability of a generic version. Sales in the United States, where the patent remained in effect, rose 13% year-over-year. Merck is forecasting full-year 2006 Zocor worldwide sales of $2.3 billion to $2.6 billion.”

The generic manufacturers, especially Israel’s Teva, are putting a brave face on this move. George Barrett, chief executive of Teva’s North American unit, said, “Our understanding is that the specific UnitedHealth program relates to fewer than 5% of US citizens covered by health insurance programs.” True, but the precedent has been set.

Of course, this only goes to show what a huge mark up the current healthcare system permits in the first place. The drug makers (who hate being called that – as if “pharmaceutical manufacturers” couldn’t make an addictive or lethal product, like Vioxx) claim they need the huge profits from successful drugs to continue research and to pay for research dead ends. They would be more convincing if their R&D budgets exceeded their marketing budgets. Of course, a national healthcare system in which all the buying power would be aggregated into a single purchaser would fix most of these problems – which is why the drug makers oppose it.

© Copyright 2006 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

Home