Go read Dr. Rost’s post — I’ll wait. Okay. You’re back now? Good. In sum, Dr. Rost posits that Schering is doing an incredible job of fleecing American doctors about Vytorin and Zetia — pointng to the would- be, so-called 75 percent market retention rate (about which the reps are no doubt boasting), through the first four months in 2008.
Now, if the truth be told, though, I’ll take almost no credit for this very-friendly rejoiner, below — for it was articulated to me by another financier, whose abilities and instincts I deeply respect — as we both considered short position strategies, more generally — he had a very good observation about the “only” 22.25 percent downturn in Vytorin/Zetia scripts. Essentially, he said:
One possibility (and, coincidentally, he is a man taking a generic statin for his high-cholesterol-levels) may be that it will take 120 or more days (measuring, now, from the ACC Panel’s ENHANCE discussion — March 30, 2008), for those old Vytorin/Zetia prescriptions to be “fully flushed out”. He thinks most ordinary folks buy in four– (or more) month doses, to save money (maybe even from Canada, in bulk — despite the questions surrounding that course), driven in part by the fact that Vytorin is just so darn expensive. This theory holds that lower to middle-market Americans (boomers, mostly) aren’t likely to throw out expensive medications. No, they’ll wait until close to the normal time to refill (late-July, or early-August 2008), to visit their doctors — then their doctors will write a new Lipitor or Crestor or generic Zocor script.
Or so his theory goes — and, he has a significant short position on SGP, to back this thinking up.
He feels — like I do — that by late Summer ’08, we will begin to see the bulk of the middle-market switching. As Sen. McCain’s case (albeit unintentionally) proved, it is likely that the richest 1/10 of one percent have already tossed their Vytorin (regardless of the cost per pill), and switched — in his case, to generic Zocor. So, if Vytorin lost about 25 percent of the market when it was only the richest .001 of the nation switching, and ignoring day-to-day running costs of the meds they take — what will happen to those whose insurance carriers will now bring the co-pay up to 40%, or 50% (or more) of the retail price of Vytorin/Zetia?
And what of those Americans without health insurance, at all? For those 49 million or so Americans, it would seem unlikely that they’d stay on Vytorin — if they ever were on it — either taking nothing, or buying generic statins instead. It is just. so. darn. expensive. Did I mention that? Oh yeah — I guess I did.
[NOW, GO BACK OVER TO DR. ROST’S JOINT AND WISH HIM A HAPPY BIRTHDAY!]