What are generics and why are they comparatively cheaper than their brand names equivalents?
A generic drug (generic drugs, short: generics) is a drug which is produced and distributed without patent protection(drug policy). The generic drug may still have a patent on the formulation but not on the active ingredient. A generic must contain the same active ingredients as the original formulation.
Why are they comparatively much cheaper than their original brands?
Patented medicine is more expensive because:
- Innovative brand-name pills require great amounts of money (from hundreds of millions of dollar to billions) and time (nearly 10-15 years).
- Advertising and Marketing techniques are quite costly as well.
The manufacturer then has to compensate its expenses. This is the reason why the price for patented medicines is so high. When generic products become available, the market competition often leads to substantially lower prices for both the original brand name product and the generic forms. The time it takes a generic drug to appear on the market varies. In the US, drug patents give twenty years of protection, but they are applied for before clinical trials begin, so the effective life of a drug patent tends to be between seven and twelve years. It has been estimated that the average cost to brand-name drug companies of discovering and testing a new innovative drug (with a new chemical entity) may be as much as $ 800 million however the true costs as estimated by Goozner (in his book, The $800 Million Dollar Pill) is closer to $100-$200 million.
Brand-name drug companies have used a number of strategies to extend the period of market exclusivity on their drugs, and prevent generic competition. This may involve aggressive litigation to preserve or extend patent protection on their medicines, a process referred to by critics as ‘evergreening.’ Must read drug policy Patents are typically issued on novel pharmacological compounds quite early in the drug development process, at which time the ‘clock’ to patent expiration begins ticking. Later in the process, drug companies may seek new patents on the production of specific forms of these compounds, such as single enantiomers of drugs which can exist in both “left-handed” and “right-handed” forms,different inactive components in a drug salt,or a specific hydrate hydrate form of the drug salt. If granted, these patents “reset the clock” on patent expiration. These sorts of patents may later be targeted for invalidation by generic drug manufacturers(see drug policy).
- The production doesn’t require a new formula or production technology (existing ones are used instead by reverse-engineer known drug compounds).
- Generic pills are bio-equivalents of the brand drugs and therefore they don’t need the additional advertising. In fact they receive the benefit of the previous marketing efforts of the brand-name drug company, including media advertising, presentations by drug representatives, and distribution of free samples.
- Generic manufacturers also do not bear the burden of proving the safety and efficacy of the drugs through clinical trials, since these trials have already been conducted by the brand name company.
That is why generic pills are cheaper and are so popular. These save the patients and insurance companies substantial costs.