Did you know, for example, that when large corporations buy one another, they often have to pay millions — or even billions — of dollars for something accountants call “intangible assets”? One of these assets — called “goodwill” — can be thought of as the value of the brand. It reflects the profits a company makes over and above what you’d expect from the tangible assets alone, simply because of its reputation.
Big pharmaceutical companies want you to buy into the value of brands when purchasing prescription medications — so you’ll pay more for them. That’s one of the reasons they spend so much on advertising.
The problem for Big Pharma, however, is that once a brand-name drug’s patent runs out, the value of the brand name (logically at least) is nil.
What would the value of Coca-Cola’s brand be if everyone were allowed to make soft drinks using Coke’s formula? How about if KFC had to share Colonel Sanders’ secret recipe? It would diminish quite a bit, wouldn’t it?
In the pharmaceutical business, once a drug’s patent runs out, the FDA (or equivalent regulatory bodies in Canada and elsewhere) basically allows the secret recipe for the drug to be given to other qualified drug makers, who create generic versions of the drug. Because the generic drug makers don’t spend billions of dollars on marketing, research and development, they can charge significantly less for the drug than the original drug manufacturer.
At that point, it just doesn’t make sense to buy the brand name version of the drug. It’s like paying for the designer label on your shirt rather than the shirt itself. And is ANYONE really impressed by the fact that you use brand-name drugs? (I didn’t think so.)
Two informative news reports over the past few days, one from KING5 in Seattle/Tacoma (looking at over-the-counter meds) and another from a pharmacist writing for an Ohio newspaper (focusing on prescription drugs), look into the difference between brand and generic drugs and come to the same conclusion: the only difference is the price.
This is obviously why large pharmaceutical companies are now lobbying state legislatures to make it more difficult to substitute generic drugs for brand drugs when your doctor writes the name of the brand drug on your prescription. From Delmarva Now:
Pharmacists are usually authorized to automatically substitute generics for brand-name drugs — unless specifically instructed not to do so. Major drugmakers are fighting back by lobbying state legislatures to make it more difficult to make substitutions, seeking to require direct communication between doctor and pharmacist before making each switch. Maryland’s General Assembly considered two such bills during the 2008 legislative session and will likely see similar proposals in 2009.
While doctors may have legitimate reasons to prefer a brand-name drug, they also have the option to make that specification on a prescription. There is no need for a phone call to a busy doctor every time a prescription is filled.
This lobbying is an attempt to protect pharmaceutical profits by making it more difficult to purchase generic drugs. Since many insurance plans will not pay for a brand-name drug once the generic is available, this could end up costing patients a lot more –or forcing them to forego a medication altogether.
So don’t be fearful of generic drugs — and fight for your right to buy them if you need to. They’re not inferior to brand-name drugs; they just cost less.47