Fluticasone now in generic, sort of

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Flonase, one of the first line corticosteroid nasal sprays (for allergic rhinitis, etc.) is now available in generic from PAR pharmaceutical. When you look on the box, though, you notice something interesting: it's actually made by GlaxoSmithKline, the people who make Flonase: [*]:
First-quarter sales growth was driven by fluticasone propionate nasal spray. In February, Par announced that it entered into a supply and distribution agreement with GlaxoSmithKline (GSK) in the U.S. to distribute the product. Fluticasone propionate nasal spray is fully substitutable for GSK's allergy spray Flonase and is manufactured by a GSK subsidiary. After a restraining order temporarily halted distribution of generics, shipments of Par's product resumed in March. In the first quarter, fluticasone achieved sales of $57.8 million.

I'm not an expert on generic drugs, but my impression was that mostly the manufacturing was done in different plants operated by the generic manufacturers, rather than by the original patent-holder. Of course, you can still buy Flonase at a rather substantial markup. I believe this is what's known as "price discrimination".

Interestingly, generic Flovent (the inhaled aerosol version of the same drug) does not appear to be available yet. I wonder if this has anything to do with Flovent changing their propellent over from CFCs.

2 Comments

This is not price descrimination. This occurs all the time with brands that have just gone generic. It gives the patent company a chance to make some money in the generic since it will lose money in sales of the brand. And it gives the generic manufacturer the preferred product (if other generic companies make a generic version, the authorized generic is usually the preferred and can sell at a premium example: roxane flonase is a bit cheaper than the par)

R,

I think you just defined price descrimination.

The sort of setup you described creates three tiers of products: branded, generic manufactured by brand, completely generic. From a physical perspective, they are all very similar. However, people who get different levels of confidence in the brand's participation can pay different premiums to get that confidence.

This process allows the brand to extract more of the surplus. Thus you have price descrimination.

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