News February 2007

Generic Drugs Make Big Profits For Some Pharmacists

It's no secret that generic drugs save a lot of money at the pharmacy counter but you may not realize how the cheaper drugs can bring in big profits for pharmacists.

6 News sat down with a Knoxville pharmacist who spoke candidly about the money he brings in from the cheaper prescriptions.

"I would like to see at least 30 percent (profit) on a generic medication as opposed to eight or nine percent on a brand name," says David Belew, PharmD, with Belew Drugs.

Belew went on to say 65 to 70 percent of his inventory is made up of generic drugs. "So filling many more generic prescriptions, of course a larger percentage of my profit would be through generic medications."

However, Belew says his profit doesn't trump the big picture. Generic drugs also allow him to keep prices low over all, employ his staff and keep the lights on at his family-run pharmacy.

And generics help Belew be more flexible with his low income customers. "It gives me, as a business owner, the discretion also to lower the price of that medication substantially in order to help an individual out."

Belew says generics are just as good as their brand name counterparts and they're what he turns to for his family's prescriptions as well.

"Yes, on a percentage basis, yes I do make more money on generic medications. But from a cost savings standpoint, to the patient there really is no decision to be made."

Pharmacy customer Carole Milligan agrees. "Oh yes, if they offer generic I definitely go for it. I feel it's as good as a brand name."

Here's are some key differences between a generic drug and its brand name counterpart:

• A generic drug is the chemical equivalent of a brand name, meaning the chemicals needed to treat your ailment must be the same.



• The difference usually is found in the inactive ingredients. Those affect colors, shapes, flavors and preservatives. Generics also have different packaging. But the differences don't affect the way the drug works.



• The Food and Drug Administration mandates that generics be the same strength and dosage as brand name drugs.



• A generic drug must pass equivalency tests that prove it is made of the same active ingredients and dissolves as the same rate as the brand-name drug before it's approved for sales.

Here's another way to explain the difference between brand name drugs and generics. It's not a matter of chemistry or quality. It's whether the drug is still under patent protection by the company that originally developed it.

When a company develops a new drug, it's typically granted a patent for 20 years. That means other pharmaceutical companies can't sell the substance without permission from that company.

But when the patent expires, other companies can start selling the drug.

Since companies that sell generic drugs have lower development costs, they can produce them at lower unit costs, sell them for less and still make a profit.

Source http://www.grandrapids-mn.com/