Function and problems of brand name pharmaceuticals
| DOI | https://doi.org/10.1108/10610420910972756 |
| Pages | 240-241 |
| Date | 17 July 2009 |
| Published date | 17 July 2009 |
| Author | Herbert Jack Rotfeld |
| Subject Matter | Marketing |
Beyond product brand management
Function and problems of brand name
pharmaceuticals
Herbert Jack Rotfeld
Auburn University, Auburn, Alabama, USA
Abstract
Purpose – This paper aims to discuss the problems faced by US consumers as insurance companies use brand names as a heuristic tool to identify
medical profligacy, penalizing consumers with higher co-payments or even refusing funding support for new and necessary medications.
Design/method/approach – Anecdotes and descriptive reviews of the literature describe the basis for the problem. The paper looks at the use of
brand names in the pharmaceutical industry in comparison with generic versions. It gives a brief history of brand name development.
Findings – The paper finds that, for the pharmaceutical companies, or any company, a brand name allows them to escape from the confines of generic
demand with the price and distribution power from brand demand. Furthermore the easier name can speed adoption of a new product. However, the
price spread between new brand name drugs and older ones with non-branded competition gives rise to unfounded presumptions on all brand names.
Practical implications – Brand names can have value for both consumers and physicians, but it might be desirable for the US health care system to
put an end to a brand’s exclusive use beyond the innovation’s patent protection.
Originality/value – The paper provides concluding recommendations of a broad regulatory solution that pharmaceutical companies would probably
oppose.
Keywords Pharmaceutical products, Generics, Health insurance, United States of America
Paper type Viewpoint
For the most part, pharmacological sleep aids are taken at
bedtime. After popping a pill, the person sleeps through the
night and (hopefully) does not feel drowsy the next day.
However, since they can be habit forming, these drugs are not
recommended for continuous ongoing use. For the vexing
situation faced by the person who occasionally wakes up in
the middle of the night, these products become a tad
counterproductive. If taken midway through the night, the
pill’s effective duration outlasts the remaining sleep period,
resulting in a sleepy-style “hangover” well into the next day.
A new drug innovation on the market solves this problem,
with research showing quick effects followed by a flushing out
of the system within a couple hours. The sufferer with 2 a.m.
bed spins gets help falling asleep without morning drowsiness.
Having neither sleep apnea nor narcolepsy, the patient
suffering from a periodic overly active middle-of-the-night
mind would find this new product a long-sought solution.
Unfortunately, some US health insurance companies refuse to
support payment for the prescription since, as with any new
drug innovation, it is an expensive brand name. Categorized
broadly as a sleep aid, the insurance company would note
other existing sleep aid products with less costly generic
versions, thus the decision-making heuristics of the financial
gatekeeper company directs purchase of what it sees as a less
expensive alternative. Even if purchase is allowed, the
patient’s share of the payment increases significantly
whenever the prescription is not in generic form to
discourage consumers from choosing brand name products.
It is the frustration of many patients that their medical
coverage either refuses to pay for any brand name drugs or
requires a higher co-payment for their purchase. In the above
example, the patient and the doctor spend time arguing with
(and cursing at) the insurance company since the generic
alternative is really a different product. The brand is a new
chemical with clearly different effects that is still under patent
protection.
Of course, there are many times that doctors recommend or
require a brand name drug despite the existence of generic
equivalents, making the patient decide if the specific brand is
worth the higher cost. Many consumers do not know that US
federal regulations and oversight make certain that the generic
manufacturers provide products that are chemically identical
to the brand name originals; sometimes the brand name
owners use their excess production capacity to provide the
generic versions as well as the brand name products. The
Food and Drug Association (FDA) repeatedly assures us that
any functional benefit of a brand name product is vir tually
nonexistent since generic drug manufacturers are subjected to
the same standards as their brand name counterparts. In some
sense, the generic drug could be considered safer since it is
less likely to be the target of illegal drug counterfeiters. But
then, any patient taking drugs to correct a medical problem or
treat a life-threatening condition would not be easily
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
18/4 (2009) 240–241
qEmerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420910972756]
240
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