(1) Typically the company will contract out of the product to a generic company for carrying on the same brand name since it will be too costly for the Innovator Company if there is a “price cut.” However, due to API technology and sourcing issues, currently there are over 80 drugs out of patent protection; still no generic company is able to make them.
(2) The price is based on the total investment for the drug development and number of years expected for the recovery and return. The average cost for a new drug from discovery to the market is currently over 800 million dollars. That’s why a branded drug can cost over $8 per tablet.
(3) Line extension; reformulation or combination or prodrug. Not every Rx can be easily converted to an OTC. Remember that Rx is more profile than OTC, for example, Claritin became an OTC was because too many copycats out there, the company had no choice.
