This paper aims to discuss the problems faced by US consumers as insurance companies use brand names as a heuristic tool to identify medical profligacy, penalizing consumers with higher co‐payments or even refusing funding support for new and necessary medications.
Anecdotes and descriptive reviews of the literature describe the basis for the problem. The paper looks at the use of brand names in the pharmaceutical industry in comparison with generic versions. It gives a brief history of brand name development.
The paper finds that, for the pharmaceutical companies, or any company, a brand name allows them to escape from the confines of generic demand with the price and distribution power from brand demand. Furthermore the easier name can speed adoption of a new product. However, the price spread between new brand name drugs and older ones with non‐branded competition gives rise to unfounded presumptions on all brand names.
Brand names can have value for both consumers and physicians, but it might be desirable for the US health care system to put an end to a brand's exclusive use beyond the innovation's patent protection.
The paper provides concluding recommendations of a broad regulatory solution that pharmaceutical companies would probably oppose.
