Meet Pharma Products and Stakeholders
Learning Objectives
After completing this unit, you’ll be able to:
- Categorize the major types of pharmaceutical products and give examples of each one.
- Identify the key stakeholders in the pharma ecosystem and describe their roles.
- Explain how pharma companies interact with stakeholders to bring drugs from the lab to the patient.
From Pills to Patients
If we tried to list every drug on the market today, we’d be here a while, as there are thousands! Instead, let’s talk about the major categories of pharma products that help classify the vast medicine cabinet. Pharmaceuticals come in a variety of forms and classes. Understanding these categories will help you make sense of how medicines are developed and used.
Generic and Brand-Name
A drug by any other name would work just as well. Who knew a reference to Romeo and Juliet could explain generic drugs? A brand-name drug is the original product developed and marketed by a pharmaceutical company, usually under a patent and a trademarked name. A generic drug is a copy of that drug made by another manufacturer after the original patent expires.
Generics have the same active ingredients, strength, safety, and quality as their brand-name counterparts. In terms of how the drug works in your body, there’s usually no difference. The only big differences are in branding and price.
Here’s how it works: When a pharma company invents a new drug, it typically gets a patent granting exclusive rights to sell that drug for around 20 years. During this period, it’s sold under a brand name, and only the patent-holding company can market it. When the patent nears expiration, other manufacturers can apply to regulatory authorities to produce their own version of the drug. Once approved, the version is sold as a generic, usually under the drug’s chemical name.
Because generic makers didn’t bear the high R&D cost of discovering and developing the drug, they can sell it at a significantly lower price. It’s why Alvin’s painkiller might cost $10 for the brand-name version but only $2 as a generic. In terms of treatment effect, both versions should work the same; regulators require that generics perform equivalently to the brand drug.
Generics are a crucial part of healthcare globally because they improve access and affordability. When a life-saving brand drug comes off patent, generic versions mean patients from the US to India to Nigeria can often get treatment at a fraction of the original cost. Strict regulations ensure generics have the same effect as brands, so doctors and patients can trust their efficacy.
Small Molecule and Biologic
If hearing the word “molecule” brings back memories of chemistry class, don’t worry, we’ll keep it simple. Medications generally come from two very different scientific approaches: small molecules and biologics.
Small-molecule drugs are the traditional chemically synthesized medicines. These are made by mixing specific chemical ingredients to produce a compound. They’re typically simple in structure and can often be taken as pills. Most drugs for common conditions like infections, hypertension, diabetes, and high cholesterol are small molecules. For example, the pain reliever Alvin took is likely a small-molecule drug, with a few chemicals combined into a tablet that eases pain. These drugs are generally easier and cheaper to manufacture at scale.
Biologics are a different breed. A biologic drug is manufactured in living cells or organisms rather than by purely chemical processes. Instead of mixing chemicals in a beaker, imagine using a living factory like bacteria or cultured animal cells to produce a therapy. Biologics are usually large, complex proteins that can target diseases in very specific ways. Examples of biologics include monoclonal antibodies used to treat cancer or autoimmune diseases, therapeutic proteins like insulin, and vaccines. Because biologics are proteins or other large molecules, they usually cannot be taken as a pill. Instead, they’re often given by injection or IV infusion and tend to be much more expensive than small-molecule drugs.
Speciality Drugs
Medications used to treat complex, chronic, or rare conditions are called specialty drugs, and they often need specific handling or administration.
Many specialty drugs are biologics, but some are advanced small molecules. Specialty drugs:
- Treat conditions like cancer, rheumatoid arthritis, hemophilia, HIV, or other rare diseases.
- Require injection or infusion, though some are taken orally.
- Need special storage due to temperature sensitivity or monitoring.
- Have very high costs.
Specialty drugs are the fastest-growing segment of the pharma market. A few decades ago, there were only a handful of these treatments. By the mid-1990s, fewer than 30 drugs were considered “specialty”. By 2015, there were around 300 on the market. Now, in the 2020s, specialty medications make up over 50% of total drug spending in many healthcare systems.
In other words, a small percentage of drugs account for the majority of drug costs due to their high expense for each patient. This trend is global, and as advanced therapies for cancer and rare diseases become available, governments and insurers worldwide grapple with how to pay for them.
Keep an eye on the specialty-drug category, as new gene therapies and personalized medicines come down the pipeline.
Beyond the Pills: Services
In addition to drugs themselves, pharma companies provide services for their products, to both healthcare providers and patients. For instance, a company running a clinical trial might offer onsite support or training for doctors participating in the research or a medical-information hotline to answer their product questions.
Some pharma companies provide nurse support for patients who need to self-inject a drug at home, or they set up educational websites and community programs to raise awareness of diseases. Companies sometimes even help with patients’ co-pays or give free medicine to those in need. These efforts are part of the industry’s evolving focus on patient support and access.
Meet the Pharma Stakeholders
Who are the customers of pharmaceutical companies? It’s a bit complicated because the person using the product, namely the patient, isn’t usually the one who chooses it or even pays the bulk of the cost. Here are the main stakeholders that pharma companies interact with:
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Patients are the individuals who rely on medications to get healthier or manage conditions. Ultimately, everything starts and ends with the patient. Patients consume the drugs, taking them as prescribed. They’re increasingly at the center of the healthcare system, with a growing voice in their treatment decisions.
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Prescribers are the licensed healthcare professionals who decide which drug is appropriate for a patient’s condition. They write the prescription, so they’re a primary target for pharma communications. Doctors and other prescribers need to know about a drug and trust it, or else they won’t prescribe it.
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Payers, such as private insurance companies and public health programs, pay most of the drug costs. They decide which drugs to cover and how much to pay the pharmacy or hospital for them. Payers often negotiate prices or set reimbursement rates. In many European countries, government agencies negotiate directly with pharma companies to set a drug’s price before it’s sold locally.
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Distributors are the middlemen that purchase drugs in bulk from pharma manufacturers and deliver them to the points of care. Major wholesale distributors operate huge warehouses and logistics networks to ship medications safely and efficiently. They ensure that when a patient presents their prescription at the local pharmacy, the pharmacy has the drug in stock.
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Regulators oversee pharmaceutical approvals in each country or region. They set the rules for drug development, approve new drugs, inspect manufacturing sites for compliance with best practices, and monitor safety after approval. Regulators aren’t customers in a buying sense, but pharma companies must engage with them continuously: filing applications, reporting any manufacturing issues or patient side effects, and complying with all regulations.
These stakeholder groups form the core ecosystem around pharmaceuticals. To be successful, a pharma company has to understand and address the needs and concerns of each group.
Now that you’ve learned what kinds of products pharma companies make and who the key players are, take a closer look at how the global landscape affects pharma. How do the rules of different countries and their healthcare systems influence what pharma companies do?
In the next unit, explore how drugs get approved and paid for around the world, and how pharma companies navigate these global challenges.