Can (Should) Generic Rx Companies Differentiate Themselves?

With the traditional brand market getting smaller every year, generic pharmaceutical companies are filling the majority of the billions of prescriptions filled here in the US.  Right now, there is a premium paid if they are first to market with a new generic, but that’s it.  The rest of the market is essentially a “how low of a price point can I maintain”.  At Express Scripts, we did a blind, reverse-auction process for generics that rewarded the company that could (would) sell their generics at the lowest price.

We’ve certainly seen commodity products like potatoes being branded.  We’ve seen fish and beef get branded. 

So, why not generic drugs?  I would certainly want to escape the “race to the bottom”.  It’s the opposite of the specialty discussion from the other day about justifying their premium, but I think one solution is the same. 

How can you wrap services around your generic that makes people want to pay a premium for it?  (That’s likely much less expensive that trying to build a consumer brand so people ask for Dr. Reddy’s generics or Teva’s generics.)  But, in this case, you don’t have the specialty dollars to fund a complex offering.  You want something simple, scalable, low-cost, and effective.  It’s not easy.

Has anyone tried this?  Do you think it’s feasible?

2 Responses to “Can (Should) Generic Rx Companies Differentiate Themselves?”

  1. George, it’s been done….and yep it failed.

    About 10 years ago there was a co which focused on generics which were only mfgred by Phrma co’s. There were requirements for these “branded generics” in that they had to make mention of the Phrma co on the Rx label, even though it would have been marketed under a generic division.

    Of course these generics were first to market and they enjoyed exclusivity for their six month startups…..but ultimately it failed.

    Price prevails in today’s world. It’s not the consumer’s choice which generic they get when each PBM places an allowable on the product, as opposed to the mfgr.

  2. Great questions. Seems like a key challenge is most pharmacies only having a single MFR for a product so you have to influence there first. However if one generic is then at a slight premium would that accelerate 2-tier generic plans to work against the higher cost generic? Sorry for adding questions vs answers.

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