Covetrus

12 Covetrus | ph: 855.724.3461 | fx: 888.329.3861 | cvet.co/shop M Y T H 5 Selling private brand generic drugs over brand- name drugs will decrease your clinic revenue. Historically, many veterinarians have taken a general approach to drug pricing: one markup fits all. So, if you simply double your cost to create the selling price to your clients, then yes, you will decrease your pharmacy profit by selling private brand generics over brand-name drugs. However, if you focus on maintaining your desired gross profit margin and adjust your pricing strategy accordingly, you will increase your pharmacy profit and save your clients money. It will benefit you to base pricing on the gross margin or profit dollars you target for each drug in your pharmacy and set your client pricing based on your target margins. The desired gross margin should drive your markup, not the other way around. The markup is the ratio between the cost of a good or service and its selling price (client charge). Markup is expressed as a percentage over the cost. Sell price of drug x to client - DVMʼs cost of drug x DVMʼs cost of drug x The gross margin is the difference between the selling price and the cost of goods sold, divided by selling price, expressed as a percentage. Gross profit is the difference between revenue and cost of goods sold, expressed in dollars. M Y T H 2 A private brand generic drug can have up to 20% less active pharmaceutical ingredient. To conduct the bioequivalence study, the same dosage is used for both the brand-name and private brand formulations. The FDA-CVM considers two products bioequivalent if the mean peak concentration and area under the curve are not significantly different when applying a 90 percent confidence interval approach. The acceptable limits are that the private brand product mean must be within 80 percent to 120 percent (untransformed data) or 80 percent to 125 percent (log-transformed data) of the mean of the reference product. This allows for individual animal variation in the live animal study. This does not mean that the private brand generic drug is allowed to have 20 percent less active ingredient than the brand-name drug. Private brand generic drugs must be formulated to contain the same amount of active ingredient as brand-name products. M Y T H 3 Private brand generic drug manufacturing facilities and processes do not have to meet the same standards as those for brand-name drugs. Both brand-name and private brand generic drugs must be manufactured to the same high-quality standards of the FDA. They all must be manufactured in FDA-inspected facilities, must meet current "Good Manufacturing Practices" guidelines and must be shown to be safe and effective. M Y T H 4 Private brand generic drug manufacturers do not monitor their drugs for adverse events and quality complaints post-approval like brand-name drug manufacturers do. The FDA's post-approval requirements for brand-name drugs and private brand generic drugs are identical: • Pharmacovigilance (adverse event and quality complaint) monitoring/reporting • Reporting of manufacturing changes • Ongoing stability testing • Submission to FDA of advertising and promotional materials If you only stock brand-name drugs in your pharmacy and do not offer lower-cost alternatives, you risk losing future revenue after the initial prescription runs out.

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