Generic Drug

A generic drug (pl. generic drugs, short: generics) is a drug which is bioequivalent to a brand name drug with respect to pharmacokinetic and pharmacodynamic properties. These drugs are usually sold at a lower price than the brand name drug. Generic medicines must contain the same active ingredient at the same strength as the "innovator" brand, be bioequivalent, and are required to meet the same pharmacopoeial requirements for the preparation. By extension, therefore, generics are assumed to be identical in dose, strength, route of administration, safety, efficacy, and intended use.

Reasons for cheaper price

The principal reason for the reduced price of generic medicines is that these companies incur less costs in creating the generic drug and are therefore able to offer a lower price and still maintain profitability.

Manufacturers of generic drugs are mainly able to avoid the following three costs that brand name pharmaceutical companies incur: (1) costs associated with the research and development of the drug; (2) costs associated with the navigating governmental bureaucracy for getting a drug onto the market as safe and effective; and (3) marketing costs.

First, Generic manufacturers do not have to incur the costs of searching and finding a new drug to treat an illness because they have access to adequate information regarding the brand name drug to allow them to manufacture a bioequivalent version of the brand name drug that will do the same thing.

Second, generic manufacturers do not have to prove that their product is safe and effective through clinical trials, only that their drug is bioequivalent.

Third, these companies receive the large benefit of the marketing that goes into pushing the innovator drug. The drugs that generic manufacturers are selling have been on the market for usually a decade or more and do not need additional advertising. For the same reason, generic manufacturers also do not give away sample doses to promote their products. The significant research and development and marketing costs incurred by the large pharmaceutical companies in bringing a new drug to the market is often cited as the reason for the high cost of new agents - they wish to recover these costs before the patent expires. Generic manufacturers do not incur these costs, with bioequivalence testing and the actual manufacturing process costing relatively little, and are able to charge significantly less than the "innovator" brand.

Reasons for cheaper price

The principal reason for the reduced price of generic medicines is that these companies incur less costs in creating the generic drug and are therefore able to offer a lower price and still maintain profitability.

Manufacturers of generic drugs are mainly able to avoid the following three costs that brand name pharmaceutical companies incur: (1) costs associated with the research and development of the drug; (2) costs associated with the navigating governmental bureaucracy for getting a drug onto the market as safe and effective; and (3) marketing costs.

First, Generic manufacturers do not have to incur the costs of searching and finding a new drug to treat an illness because they have access to adequate information regarding the brand name drug to allow them to manufacture a bioequivalent version of the brand name drug that will do the same thing.

Second, generic manufacturers do not have to prove that their product is safe and effective through clinical trials, only that their drug is bioequivalent.

Third, these companies receive the large benefit of the marketing that goes into pushing the innovator drug. The drugs that generic manufacturers are selling have been on the market for usually a decade or more and do not need additional advertising. For the same reason, generic manufacturers also do not give away sample doses to promote their products. The significant research and development and marketing costs incurred by the large pharmaceutical companies in bringing a new drug to the market is often cited as the reason for the high cost of new agents - they wish to recover these costs before the patent expires. Generic manufacturers do not incur these costs, with bioequivalence testing and the actual manufacturing process costing relatively little, and are able to charge significantly less than the "innovator" brand.