Current and Future Situation for Brand Name Drugs

As discussed in my previous post, healthcare costs and spending are a concern right now for many Americans, and will continue to be a prominent issue in the near future. Some propose that the use of brand name drugs, as opposed to generics, contribute to these high costs.  An article on Medical Marketing & Media’s website discusses a projected downturn in branded drug spending by drug manufacturers throughout 2012 and 2013.

Although 34 new products were launched in 2011 by drug companies and spending on branded drugs grew 2.2%, the same kind of growth is not likely in upcoming years, and contractions in spending are even a possibility. The MM&M article states generic drugs now account for 80% of prescriptions.  So why would a rational consumer not go with a generic option?  Generic prescriptions have essentially the same active ingredients as brand name drugs, but can be a fraction of the cost.¹

Well, consumers are sometimes concerned a generic drug may not produce the same effects as a brand name prescription.  Among other factors, this definitely plays a role in loyalty to some branded drugs.  However, many consumers have no other option because they simply cannot afford to pay a price premium.

Manufacturers of brand name drugs need to prepare for decreased sales, not only because of expiring patents and increased costs, but also because of the trend of consumers utilizing less health care. If patients do not visit their doctors as often, they cannot renew their prescriptions or receive new prescriptions from their physicians. Gaining new customers and holding on to current ones will be more challenging than ever to these companies in the near future, but they will need to find a way to do so.

Written by: Jamie Notaro

Edited by: Ken Chiang

¹http://www.medicinenet.com/script/main/art.asp?articlekey=46204

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