How Branding Innovations in the Pharmaceutical Industry Are Affecting Your Bottom Line

You’ve seen the long, saccharine ads about the latest brand name drugs, where patients take walks along the beach, attend their grandchildren’s sporting events, and learn to make pottery. Brand-name drugs demand high-end advertising.

And now, innovations in the way medicines are branded are affecting your company’s pharmacy benefit costs. Drug manufacturers are creating “combination drugs,” which utilize combinations of generic drugs to secure new patents. This allows holders to do three things:

1. Keep their market share of the individual drugs within the combination drug
2. Obtain a new patent or expand an existing patent
3. Influence patients to ask for the combination therapy

When doctors prescribe more expensive combination drugs, it means you’re paying more for your employees’ prescription benefit. Let’s look at a few examples of combination drugs that are driving higher prices:

Treximet (migraine pain made up of generic sumatriptan and naproxen sodium)

• Branded drug costs $780 for supply of 9 tablets
• Same generic supply would cost $257

Duexis (rheumatoid pain)

• Branded combination costs $2,061
• Same generic components cost $20

Duac (acne medication)

• Branded combination sells for $336
• Individual generic components cost $41

This New York Times piece explores the strategies pharmaceutical companies are using to encourage consumers to use combination drugs: marketing slogans like “one copay for one pill,” encouraging use of mail-order specialty pharmacies, and more.  Patients like combination drugs, but they don’t realize the affect its having on insurance costs.

So what can employers do? Here are a few steps you should take:

• Ask for a Combination Drug List from your PBM that shows the pricing difference between the combination and its generic components
• Exclude combination drugs that aren’t shown to be clinically non-inferior to the generic options
• Ask your PBM to monitor and report on patent expiration to keep your eye out for new combinations or branded drugs

For more strategies you can use to control prescription spending, read the Artemis whitepaper on Rx overspending.