Pfizer's Long-Shot Lipitor Gamble

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If an article from TheWall Street Journal about Pfizer's (NYS: PFE) plan to get an over-the-counter version of Lipitor approved is correct, big pharma is likely fighting a losing battle. On the other hand, considering the potential payoff, the time and money invested could be worth it, long shot or not.

Switching to over-the-counter status has been very lucrative for allergy pills such as Johnson & Johnson's (NYS: JNJ) Zyrtec and Merck's (NYS: MRK) Claritin. Switching Sanofi's (NYS: SNY) Allegra to over-the-counter status was the motivation behind the company buying Chattem. Heartburn medications such as Procter & Gamble's (NYS: PG) Prilosec OTC and Takeda's Prevacid 24HR have also been big winners.

But allergies and heartburn are fairly easy to self-diagnose. Diagnosing high cholesterol is considerably harder for people who lack a machine capable of doing blood tests in their homes.

Merck failed to get approval of an over-the-counter version of its statin, Mevacor, for exactly that reason. According to the Journal, 30% of patients who thought they should take the drug really wouldn't benefit. The FDA won't risk needlessly exposing those patients to the side effects of Lipitor, even if they are relatively mild.

And for patients that actually did need a cholesterol-lowering drug, how would patients know if the drug was working? If you're going to have to see a doctor to get lab work done, the doctor can just write a prescription. Lipitor is headed for generic competition in November, so that scenario is no longer beneficial to Pfizer. Unfortunately the FDA isn't going to take that into account.

Since this was only an article citing "people familiar with the matter," it's a little hard to know what Pfizer's exact plans are. Assuming it keeps the costs of exploring this idea to a minimum, the downside seems reasonable. I have a hard time seeing this going anywhere, but given the potential payoff, it's probably worth the risk.

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At the time this article was published Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Pfizer, Johnson & Johnson, and Procter & Gamble. Motley Fool newsletter services have recommended creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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