Free Drugs!

An economy that's causing consumers to cut back on everything -- including their medications -- and a bad public image thanks to skyrocketing medical costs has the pharmaceutical industry in a conundrum.

But Pfizer (NYSE:PFE) seems to have a solution for both problems: Give the stuff away. At least to people who have lost their jobs and health insurance recently and can show financial hardship. The program, announced last week, will cover more than 70 drugs, including Viagra. Yep, the erectile dysfunction drug is on the list -- insert your own joke here. 

The program is clearly a ploy to keep patients on Pfizer's drugs -- being on the drug for three months before becoming unemployed is a prerequisite. Pfizer is trying to avoid a situation where doctors might switch patients under financial hardship from a drug like Lipitor to a lower-cost generic statin like a knockoff of Merck's (NYSE:MRK) Zocor or Bristol-Myers Squibb's (NYSE:BMY) Pravachol. In that situation, when the job loss ends, many patients would likely stay on the generic rather than going back to the more expensive branded drug, especially if it seemed to be working.

The new program seems like a great move by Pfizer. It's providing excellent positive public relations and, considering the high margins on drugs, the program isn't likely to cost the company that much money -- Pfizer's employees have even volunteered to pick up some of the tab. I expect we'll see more pharmaceutical companies following suit with free or discount drugs: GlaxoSmithKline (NYSE:GSK) might have one in development, and I'd expect its European brethren, sanofi-aventis (NYSE:SNY) and AstraZeneca (NYSE:AZN) to follow suit.

More Foolishness:

• This Fool is a raging drug addict.
• The whole health care industry has volunteered to keep prices down.
• Analysts say this stock is a double.