When a manufacturer launches a new drug, that manufacturer holds exclusive rights to sell the product for a defined period of time. Depending on the drug, these rights can last for 6-15 years. When these rights expire, the manufacturer faces Loss of Exclusivity (LOE). In practical terms LOE means that the manufacturer no longer owns the drug’s formula, so multiple manufacturers can legally market and sell generic drug equivalents.
This juncture in a drug’s lifecycle is arguably the most challenging one manufacturers face. As generics enter the marketplace, it can mean the end of the product’s brand equity and therefore, the end of the revenue stream.
How does brand equity impact the pharmaceutical industry?
Brand equity refers to a product’s reputation in the marketplace. Customers who trust a brand will not only return to it, but will perceive it as superior to a generic alternative. Maintaining a product’s brand equity after loss of exclusivity is challenging, but it’s essential to preserving a revenue stream. For example, Almirall’s Aczone has high brand equity, universally understood as a first-line treatment for acne. Providers are more likely to recommend it and consumers are more likely to purchase it than generic alternatives. Even though the product is long past LOE, its strong brand equity resulted in a 17.3% market share in 2021.
Within the healthcare industry, brand equity has its own challenges. Pharmaceutical consumers experience a disconnect between the product and their purchase that doesn’t occur in other markets. For example, a brand-loyal consumer with a headache will purchase Tylenol without really understanding the product or how it works. Instead of analyzing the science behind the drug, the consumer trusts the brand. When a consumer doesn’t possess the information to truly assess a product’s quality, a strong brand can step into that knowledge gap and assure the customer that they are choosing the right product.
How does a manufacturer maintain brand loyalty after LOE?
Despite appearances, loss of exclusivity doesn’t have to be the end of the road. Drug manufacturers have a number of options to maintain market share. One of the most straightforward is to employ a direct-to-consumer solution that puts branded medication in the hands of its consumers, whether or not they have insurance.
In today’s healthcare market customers are accustomed to the Amazon shopping experience, and they want the same thing in their healthcare. In the wake of COVID, these patients also want digital options for acquiring their medication. A direct-to-consumer drug distribution channel meets these patients where they already are by providing a seamless, end-to-end online experience.
In a direct-to-consumer scenario, a patient visits a manufacturer-branded ecommerce website. The patient schedules a telehealth appointment to discuss their medical concerns. After the physician makes a diagnosis and issues a prescription, the patient’s insurance is verified and the medication is shipped directly to the patient’s home. If the patient is uninsured or their insurance doesn’t cover the drug, a cash pay option allows them to purchase the brand-name drug that they know and trust. In the end, brand-loyal customers can continue taking the medication and manufacturers can compete effectively against generics.
Aside from allowing manufacturers to offer an alternative channel to access a brand-name drug, a direct-to-consumer solution has numerous advantages for both patient and manufacturer.
The healthcare industry is heavily regulated and pharmaceutical manufacturers bear the burden of compliance. Maintaining regulatory compliance is costly and time-consuming. In the absence of a dependable revenue stream after LOE, manufacturers may be wary of supporting that cost. Rather than continuing to juggle increasingly complex regulations while marketing their drug, manufacturers who use a direct-to-consumer solution can leave compliance to the organization that manages their ecommerce site.
Shipping and fulfillment
Before a drug reaches loss of exclusivity, manufacturers have little control over where their customers fill their prescriptions. If a customer experiences problems accessing the therapy, the manufacturer’s hands are tied. A post-LOE branded direct-to-consumer solution mitigates this because it includes shipping and fulfillment, delivering the medication to the patient’s doorstep. What’s more, cold chain logistics ensure that products are always stored and shipped at the correct temperature. Manufacturers needn’t worry about logistics and can rest assured that their brand-loyal customers are always able to access their product.
Improved patient access
Customers want convenience, and offering a direct-to-consumer channel delivers that convenience. The rapid consumer adoption of telehealth during COVID illustrates that consumers are open to receiving their healthcare online. When manufacturers capitalize on this trend and offer a direct-to-consumer solution, they’re providing their patients a digital channel to purchase a branded drug. Direct-to-consumer solutions can also be particularly effective for serving patients who live in rural or underserved areas where there are barriers to healthcare. Rather than coordinating travel and taking time off work to see a doctor or pick up a prescription, these customers can access branded medication through telehealth appointments and home delivery of medication.
It’s challenging to maintain brand equity after loss of exclusivity, but tools like direct-to-consumer solutions mitigate patient barriers and help manufacturers preserve a drug’s revenue stream.
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