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Key take home points
Prescribing private brand generic drugs over
brand-name 'pioneers' is a great way to meet cost-
conscience client demands and boost profitability for
your practice. Consider the following points:
Bioequivalent private brand generic
drugs include the same active
pharmaceutical ingredient — and in
the same amount — as brand-name
veterinary drugs.
Private brand drugs usually cost much
less than brand-name "pioneers".
This helps your practice compete (e.g.,
against online retailers) while offering
you more profit potential.
Clients will be thrilled that you are
charging them less for medications,
whether they are for one-time use or
for chronic disease management and
may reward you with their loyalty and
repeat business.
Norbrook
®
Inc. USA (2017, August ). Know the Facts About Generic
Veterinary Drugs.
Sell price of drug
x
to client - DVM's cost of drug
x
Sell price of drug
x
to client
The following sample calculation of markup
and gross margin for a generic drug shows how
it works:
DVM's drug cost from distributor = $25.00
DVM's drug charge to client
Markup =
$40.00 - $25.00
= 0.60 or 60%
$25.00
Gross Margin =
$40.00 - $25.00
= 0.38 or 38%
$40.00
It makes good financial sense to charge clients lower
margins on maintenance drugs and higher margins on
drugs used for short-term treatments. Clients often shop
long-term therapy drugs, such as nonsteroidal anti-
inflammatory drugs (NSAIDs), and will quickly search the
internet for lower-cost options.
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. In an age of
cost-conscience consumers, clients may feel misled if they
learn from another source that a private brand generic
drug option existed. After all, many clients purchase human
generic drugs as a rule when they are available for their
own medications.
