The Case of Synthroid (B): Marketing a Drug Coming Off Patent

Abstract

The case tells the story of Synthroid from its development in 1958 as the first synthetic thyroxine molecule to its competition against generic equivalents in 2004. The case introduces students to the pharmaceutical industry, its practices, and some of the complexities of pricing and drug choice, with drug manufacturers, insurance companies, physicians, pharmacists, and patients all playing a role. It also provides a primer on hypothyroidism, its symptoms, and its treatment.

Because Synthroid was developed and introduced before FDA regulations and drug standards of identity were fully established, it was difficult for competitors to get their drugs certified as identical to Synthroid. Through a series of efforts with physicians, especially endocrinologists, Synthroid's owners were able to maintain the perception for forty-six years that Synthroid was uniquely effective. In 2004, however, the FDA declared several competitive products to be bioequivalent to Synthroid, which posed a significant challenge to its owner, Abbott Laboratories. Students are challenged to consider options to maintain the drug's unit volume, revenue, and/or profit in these difficult circumstances.

The case is written in two parts. The (A) case provides background on the history of the drug, the pharmaceutical industry and its marketing practices, and hypothyroidism and its treatment, and it concludes in 2004 as Abbott's marketers face the impending challenge of defending the Synthroid business against generic competition. The (B) case describes what Abbott actually did to maintain its share in the United States and outlines its strategy in India, a market without patent protection for pharmaceuticals.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resources

Exhibit 1: Synthroid Coupon

Source: Synthroid.com.

Figure

Exhibit 2: Synthroid vs. Generic Market Share in the United States

Source: Graph created by using data from Bloomberg Database, “Levothyroxine Sodium Total Dollars 12/31/06 to 12/31/11” (accessed July 11, 2012).

Figure

Source: Graph created by using data from Bloomberg Database, “Levothyroxine Sodium Total RX 12/31/06 to 12/31/11” (accessed July 11, 2012).

Figure

Exhibit 3: Market Share of Off-Patent Drugs vs. Generics in the United States (total Rx dollars)

Source: Graph created by using data from Bloomberg Database, “Lipitor Total Dollars 9/11 to 6/12” (accessed July 23, 2012).

Figure

Source: Graph creating by using data from Bloomberg Database, “Plavix Total Dollars 5/4/12 to 7/6/12” (accessed July 23, 2012).

Figure

Exhibit 4: Pricing for Off-Patent Branded Drugs and their Generic Equivalents

Medication

Dose

Qty

Time Off Patent

Pharmacy Cost ($) a

Revenue from Insured Patients ($) b

Retail Price Paid by Uninsured Patients ($)

Synthroid

100mcg

30

> 8 years

18.47

22.16

30.99

Levothyroxine

100mcg

30

3.08

11.41

12.69

Synthroid

100mcg

100

> 8 years

61.53

73.86

82.69

Levothyroxine

100mcg

100

10.25

38.02

30.69

Lipitor

10mg

30

8 months

118.06

141.67

139.69

Atorvastatin

10mg

30

1.82

115.52

93.99

Plavix

75mg

30

3 months

193.36

232.04

223.69

Clopidogrel

75mg

30

1.67

308.55

70.99

Lexapro

20mg

30

4 months

136.69

164.03

169.69

Escitalopram

20mg

30

58.62

135.29

109.69

Protonix

40mg

30

> 2 years

175.46

210.56

232.69

Pantoprazole

40mg

30

1.45

13.02

44.69

Flomax

0.4mg

30

< 3 years

141.78

170.14

171.69

Tamsulosin

0.4mg

30

3.13

126.41

99.69

Bold indicates off-patent branded drug.

Italics indicates generic equivalent of branded drug above.

a. Approximate price paid by pharmacy to manufacturer as of July 2012.

b. Sum of patient co-pay and insurance company payment.

Source: Osco Pharmacy, July 2012.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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