Johns Hopkins Health Alert
Why Generic Drugs Cost Less
Between 2005 and 2010, brand-name drugs with a market share of about $100 billion will lose their patent protection. Taking advantage of these generics could save you up to $5,000 a year in out-of-pocket expenses. Here's what you should know …
Once the patent for a drug expires, any company can manufacture and sell the drug as long as it proves to the U.S. Food and Drug Administration (FDA) that its generic meets the following criteria:
- The generic drug contains the same active ingredient as the branded product.
- The generic drug is available in the same dosages and is administered in the same way.
- The generic drug is of equal purity and quality.
- The generic drug enters the bloodstream as quickly as the brand and results in similar blood levels of the drug.
Because federal regulations stipulate that the generic version of a drug must look different than the branded version, the generic drug will contain different inactive ingredients.
In general, a generic drug costs less than the brand, but how much less depends on a number of factors. Typically, the first generic drug to receive FDA approval is awarded six months of market exclusivity, which means that no other generic drug can enter the market during that time. Because of a lack of competition, the first generic usually sells for 94% of the branded medication -- not much of a cost savings.
But after this half-year period, as the market floods with generic drugs from other companies, the generic drug price begins to drop, often dramatically. For example, with two generic drugs on the market, the price drops to half that of the brand; with five generics it falls to a third and then hovers at a fifth of the brand price once seven or more generics are available.
- Generic companies are able to offer the same medication as the branded companies for far less money because they spend little on research, development, and marketing. They do not need to conduct extensive trials to prove a drug's safety and effectiveness.
Taking Advantage of Savings: As more drugs go generic in the coming years, taking advantage of them could make a considerable dent in your drug expenditures, even if you have prescription drug coverage. The copays for generics are usually lower, and some plans require no copay for generic drugs.
Posted in Prescription Drugs on June 23, 2009
Medical Disclaimer: This information is not intended to substitute for the advice of a physician. Click here for additional information: Johns Hopkins Health Alerts Disclaimer
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If they are the same, why do many doctors insist on continuing with the original drugs instead of switching to generics??? This has always been the case with me.
Posted by: Elizabeth Lewis | June 27, 2009 2:33 PM
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A partial explanation at best. Is it posssible that as more companies begin to produce the generic drug, they may be manufactured in other countries, specifically third world or underdeveloped countries that also help drastically reduce the cost, but at what price?? Does the FDA test every pill or capsule? You know at best, they may check a few pills from a specific lot number, but then again every lot produced?? In summary the criteria set forth by the FDA sets excellent standards, but it is virtually impossible in my opinion to guarantee them in all generics. I use some generics, however in every instance the pill or capsule is the same color, or the the exect same shape as the brand name. Examples are Ramipril(Altace), Cardivol(Coreg), Amlodipine Besylate (Norvasc)
Posted by: svhs | June 27, 2009 2:31 PM