Generic drugs are medications that are produced and distributed without patent protection. While the formulation of a generic drug may still be patented, the active ingredient itself is not. Generic drugs must contain the same active ingredients as the original brand-name formulation.
One of the main reasons generic drugs are significantly cheaper than their brand-name counterparts is the cost involved in bringing a new drug to market. Brand-name drugs require extensive financial investment, often costing hundreds of millions to billions of dollars, and several years of development. This includes expenses for research, development, clinical trials, and marketing.
When generic versions of a drug become available, competition in the market typically drives down prices for both the original brand-name product and the generics. The time it takes for a generic drug to enter the market varies, but in the United States, drug patents typically provide around 20 years of protection. However, due to the time taken for clinical trials and regulatory approval, the effective patent life may be between seven and twelve years.
Brand-name drug companies may employ strategies to extend their market exclusivity and prevent generic competition, a practice sometimes referred to as ‘evergreening.’ This can involve seeking additional patents for specific formulations or components of the drug to extend patent protection.
Generic drugs are cheaper to produce for several reasons:
- Production of generic drugs does not require new formulas or production technology; existing methods are used, often through reverse-engineering known drug compounds.
- Generic drugs benefit from previous marketing efforts of the brand-name company, including advertising and distribution of free samples.
- Generic manufacturers do not need to conduct costly clinical trials to prove safety and efficacy, as these trials have already been completed by the brand-name company.
