Branded Generics: What They Are and Why They’re Profitable
Branded generic drugs attach proprietary names to generic drug molecules and may be marketed similarly to how branded drugs are.
picture by pharma thinkstock
Ordinary generic drugs are usually known by their chemical name. The branded drug Trimox for instance is also sold as the generic called amoxicillin. Branded generics, however, are given names to drive recognition and promote consumer loyalty. For example, Cryselle is a branded generic contraceptive pill. It goes by Cryselle rather than its generic name (norgestrel and ethinyl estradiol) to increase the likelihood of patients requesting it by name.
Some branded generics are specially made as novel dosage forms of off-patent drugs, filling in a dosage gap while offering consumers a name that is likely easier to remember than the true generic name. Branded generics are a small, but profitable segment of the pharmaceutical market.
Generic medicine has turned out to be a highly volatile issue with the medical community and patients are split about it. Different companies would have a different name and price for a chemical combination. In recent years, pharmaceutical companies have wooed doctors into prescribing their medicines, eroding the doctor-patient trust in the process.
Branded Generics Not the Same as Authorized Generics
It’s easy to confuse branded generics with authorized generics, but they’re not the same. Branded generics go through the same FDA approval process as other generics after branded drug patents expire. Authorized generics, however, are created by makers of branded drugs, under the same NDA (New Drug Approval) authorization as the original branded drug, and they may be sold before drug patents expire.
In terms of price, both branded generics and authorized generics tend to cost more than ordinary generics, but less than branded drugs with unexpired drug patents. The following table shows some of the main differences among branded generics, authorized generics, and ordinary generics.
Market and Profitability of Branded Generics
Branded generics out-earn their unbranded generic counterparts in the United States, but they make up only a small percentage of overall generic prescriptions. As of 2018, branded generic products were 13 times more expensive than unbranded generics, and made up 21% of all generic products. In other words, they occupy a small, but lucrative, subset of the entire generic market.
Prescribers, Formulary Management, and Branded Generics
Branded generics are showing growth in low- and middle-income countries, and this can complicate markets in terms of product and price differentiation. In the past, there have been accusations that PBMs in the United States intentionally mis-categorize drugs in order to get brand prices for generics, or to get higher rebates for certain generic brands.
Formulary managers must continuously review the medicines on formularies to ensure cost savings. Branded generics, like generics, provide alternatives to branded drugs, and often release savings. There is some tension, however, between formulary managers and PBMs when it comes to ways that PBMs avoid full disclosure of their revenues. Some pharmacy benefit consultants suspect branded generics as being one of the ways PBMs can hide revenue.
Whether or not branded generics complicate formulary management or relationships between formulary managers and PBMs, the fact is that branded generics have a profitable niche in U.S. pharmaceuticals. They are far more common in countries like India, China, Brazil, and Mexico, serving middle- and lower-income consumers where other options are few. Manufacturer advantages of name recognition and higher prices indicate that branded generics will be part of the pharmaceuticals market for the long term.