A Nice Blend of Generics and Name Brand Veterinary Pharmaceuticals

Generic veterinary pharmaceuticals can provide a veterinary practice with options for its client base. 

In his experience working with distributors, Todd Brodersen said the conversation on generics and premier brands doesn’t have to be an either/or debate. Rather, he believes strongly in the “both/and” viewpoint, where the generics and premier brands can co-exist within the same practice, offering pet owners their preference of brand familiarity or cost-conscious purchases.

Brands still represent the majority of what is sold in a practice, and veterinarians love the advertising and marketing the brands do create demand.

“[But] I do think there’s an opportunity for the veterinarian with generic medications to be competitive in the marketplace and have a mix where they can offer both,” said Brodersen, senior director of sales & marketing, Cronus Pharma (Editor’s note: Brodersen is also a sales columnist for Veterinary Advantage). “They can even analyze their own customer base to figure out who might prefer which, generic vs. a premier brand. But right now, it’s up to the reps to continue to introduce the opportunity to the veterinarians.”

Human vs. animal health

In human health, the generics are driven largely by third-party pay activities, meaning insurance companies. In animal health, there aren’t insurance companies saying you’ve got to give the least expensive treatment that is viable for a particular scenario that will treat, cure, or prevent something. “The generic battles are pretty easy for the generic manufacturers on the human side,” Brodersen said. “It’s all about price and volume. It’s not driven by the manufacturer – it’s driven by the insurance companies and the pharmacies.”

In human health, insurance forces the issue, with generics taking nearly 100% of the pioneer’s market share in YR1, said Jonathan Whitt, marketing manager, Companion Animal, Norbrook Inc. “Once the pioneer brand in the human pharma goes off-patent, the party is over,” he said. “Generics will drive down the prices via contract pricing with insurance companies, and when patients go to get a script filled it will be filled with a generic unless you force the issue and are willing to pay a lot more for the drug out-of-pocket.”

In animal health, Whitt said pioneer brands can continue to thrive or at least survive in most cases for years after generics launch. There is no insurance reimbursement dictating, and veterinarians are slow to change. “A lot of the growth we see in the vet and e-commerce channels is really not from stealing share from a pioneer brand,” he said. “The growth comes from naïve users that are moving up from less effective meds and can afford an Rx product at the lower price point.” There are many DVMs that still have a bias against generics, Whitt said, because “they buy into the completely false perception that animal health generics may have less quality and may be less effective than pioneer brands. Human physicians are more swayed by science and understand most generics are made in the same suites as the pioneer brands in there is not a clinical difference.”

Brodersen said veterinary medicine is starting to see pressure from the internet, which is bringing more awareness to the lesser-priced, equal-medication Rxs. “By equal, it’s got to have the same active ingredient, the same milligram strength, dosage, administration, efficacy – all those things need to be on par with whichever premier drug that they’re representing as a generic. But we don’t have a major influence that’s pushing generic. At this point, we don’t really have the veterinarians driving the changeover to generics.”

Selling strategies

Generics can be a win-win for both the vet clinic and clients for several reasons. “Vet clinics can charge clients less for their meds while making more margin dollars,” Whitt said. “More clients can now afford drugs that may have to be given every day for the rest of their pet’s lives. Those dollars can add up. Clients on fixed incomes may have made tough decisions that did not benefit their pets in the past, that can now afford their meds.”

Another factor Whitt said to consider – generics can help keep the dollars in the veterinary clinic. Clients can easily shop and learn that a generic form of a pioneer drug is available on online pharmacies. If a veterinarian does not offer the less expensive generic form, their client may buy the drug the first time it is prescribed, but they’ll lose it to an online retailer the next 100 times they get a refill.

In his work over the years with distributors, Brodersen has seen a nice blend of spiffs and commissions develop for sales reps. Herein lies the differences in selling premier brands vs. generics, he said. Premier brand manufacturers tend to focus on spiffs and incentives, while generics are favorable with higher margins.

The smart distributor rep is going to figure out how to make the right blend between generics and the premier brands, Brodersen said. “Most of these premier companies, they’re so diverse in their offering, that as a sales rep you can actually determine which categories and which clients are going to be the best to sell the premier brand to, and which categories and which clients are the best to sell the generics. You can create your own really nice blend for compensation that way.”

For instance, a small veterinary clinic in an affluent metropolitan area would be a prime target for premier brands and the best spot for reps to earn spiffs and incentives. A mixed animal practice in a more rural area that serves large animal clients as well as companion with a much higher volume of work might be more in tune with generics, thus the best opportunity for earning margin for the reps. “The mixed animal clinic wants to lower their cost, and their customers want them to lower their costs,” Brodersen said. “They’ve got more of that rural/ag-based mentality. So having the volumes potentially be more and having that customer base of the veterinarian that is cost conscious, those would be the good targets for introducing the generics.”

How can generics be a “win” for distributor reps?

What’s in it for reps? Dave Cunningham, chief commercial officer, Bimeda Inc. offered the following benefits for distributor reps to discuss generics with their veterinary clinics:

• Private labels are brands too. In many cases, generic options are their “brand” and have been private labeled for their distribution company. Reps can trust their private label departments have vetted quality products for them to offer their veterinarians.
• Commissions could be higher. In many instances, the commission on generics may actually be higher compared to that of branded company products. Especially in recent years, the margins to distribution from certain branded companies have been greatly diminished. We recommend distributor reps investigate by comparing their vendor commissions; they might be very surprised to see that selling generics can benefit their paychecks more than they have thought.
• Product Access. In many instances generic products compared to competing pioneer companies may offer more product access within distributions supply chain. That can in-turn mean better veterinarian access and lower quantities per order lowering the amount of borrowing or cash on hand for the clinic.
• Availability. In some cases, the pioneer manufacturer does not sell products through the distribution channel, so an opportunity may arise with generics that the distributor
  rep can expand their business
• Consultative selling. Being informative and acting as a consultative salesperson for their veterinarian customer works. If generics are good for the end-user, then distributor reps should be educating the veterinarian on what products are available as generics, and the associated cost savings, so, the veterinarian can pass this information down to their customers so the best decision for the customer is being done.

Benefits of veterinarians offering generics to pet owners

Dave Cunningham, chief commercial officer, Bimeda Inc., provided several benefits for veterinary clinics that offer generics to clients:

• FDA approved. Abbreviated New Animal Drug Application (ANADA) products, referred to as “generic,” have the benefit of being FDA approved, have proven the same bioequivalence and cGMP manufacturing standards of the pioneer product, but without the higher price tag. Many FDA manufacturing facilities have both “generic” and “pioneer” products produced on the same line. Both have the exact same requirements by the FDA.
• Owner compliance. A generic could make the difference between whether an animal owner can comply with a treatment option or not. This could be due to the financial burden the more expensive pioneer products have versus using a lower cost generic.
• Straightforward pricing. From the veterinarians’ standpoint, many prefer the straightforward/upfront generics pricing without the hassle of complicated rebate programs and backend money from some pioneer companies and products.
• Food animal industry. For food animal veterinarians it becomes an economic decision as their customers are trying to make a living producing pigs, cattle, or poultry. Generics that have entered the market have lowered the customer price by as much as 50%.
• Readily accepted and expected. Just as in human medicine where generics are readily accepted by the consumer, so too are generics accepted in animal medicine. The lower price points are accepted by animal owners, and all veterinarians need to be prepared to offer generics as an alternative or risk their customer going somewhere else for services.
• Financial. Generics provide an alternative to higher priced pioneer products to animal owners that may have financial limitations and otherwise might not be able to provide the proper medical and treatment care due to limited financial means.
• Competition is good. Generics provide a level of competition and options for both the veterinarian and their customers.
• Multiple sources. With supply chain issues occurring more frequently, it can negatively affect product availability, ensuring generic products are inventoried provides more supplier alternatives.

Photo credit: istockphoto.com/FG Trade