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Generics: Overview, Quality, and Cost Issues

What are generic drugs?
When a company identifies a drug in the laboratory, that innovator drug company is granted a patent on the drug, and sometimes on the manufacturing process, for a period of 20 years. During the life of the patent, no other drug manufacturer is allowed to produce or sell the same drug product without the patent holder's approval, thus eliminating direct price competition. Patent protection allows the innovator drug company to recoup its expenditures for research and marketing of the drug and to make a profit. After the patent expires, other pharmaceutical manufacturers may develop, test and market the same drug. Each of these generic drug products must meet very high quality standards and be individually approved by the FDA before being sold. These identical products, "generic drugs," contain exact quantities of the same active ingredient in the same dosage form as the innovator's product.

Are generic drugs as safe and effective as brand name drugs?
Yes. Before a drug manufacturer can market a copy (a generic) of a previously approved drug product, they must submit to the FDA evidence that: 1) the drug is formulated according to the FDA's requirements; 2) the drug can be expected to have the same therapeutic effect as the brand-name product; 3) the drug is bioequivalent (i.e., there are no known or suspected in vivo bioequivalence problems and it meets an acceptable in vitro standard) 4) the generic product meets the same appropriate requirements for stability, purity, strength, and quality as the innovator's product; and 5) the drug is labeled with the same claims, warnings and other information as the innovator's product.

Will a generic drug work as effectively as the brand-name drug?
Generic drugs must be shown to have the same rate and extent of drug delivery as the brand-name drug. For most drugs, the generic product and the marketed brand-name product stand in the same relationship to the formulation that was originally tested for safety and effectiveness during the clinical trials.

Do reputable companies manufacture generic drugs?
Yes. Some brand name companies are also involved in the manufacture of generic drugs. One example is Novartis, one of the largest branded companies, who owns Geneva Generics, the third largest generic drug manufacturer. Also branded pharmaceutical companies sometimes sub-contract with generic drug companies for the manufacturer of products.

Why are generic drugs perceived to be inferior to brand-name products?
Brand-name companies continue to market heavily against generic drugs. Brand-name drug manufacturers spend hundreds of millions of dollars to convince prescribers that their drugs are superior. Large sales forces of drug representatives, advertisements in medical and pharmaceutical journals, and direct-to-consumer advertising in magazines, newspapers and television, are utilized to promote the use of their high priced branded product over therapeutically equivalent, but considerably less expensive drugs available on the market.

Why are generic drugs so much cheaper than their brand-name counterparts?
The majority of generic drug manufacturers do not use large sales forces or marketing departments, and do not engage in extensive research of new chemical entities. They primarily focus on the development of the generic versions of established brand-name drugs at the end of the patent protection. Due to the lower cost of doing business and the high level of competition, generic equivalents of the brand-name products are sold at significantly lower prices.

Thanks to Kaiser Permanente Regional Pharmacy and Therapuetics Committee for sharing their research about generic drugs.


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