Generic Drugs

A generic drug is identical--or bioequivalent--to a brand name drug in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price. According to the Congressional Budget Office, generic drugs save consumers an estimated $8 to $10 billion a year at retail pharmacies. Even more billions are saved when hospitals use generics.

Drug companies must submit an abbreviated new drug application (ANDA) for approval to market a generic product. The Drug Price Competition and Patent Term Restoration Act of 1984, more commonly known as the Hatch-Waxman Act, made ANDAs possible by creating a compromise in the drug industry. Generic drug companies gained greater access to the market for prescription drugs, and innovator companies gained restoration of patent life of their products lost during FDA's approval process.

Although generic drug active ingredients are chemically identical to their branded counterparts, they are typically sold at a cheaper price than the brand-name drug. Generics are less expensive because the drug manufacturer does not have to duplicate the original clinical trials for effectiveness and safety, which lowers the cost to bring the drug to market. Generics are not less expensive because they are lower in quality. generics.

Branded generics, like regular generics, can only be developed after the patent expiration of the original brand name drug. However, branded generics can be made by any pharmaceutical company willing to submit the abbreviated new drug application (ANDA) to the FDA. In fact, many large pharmaceutical companies that typically only create brand name drugs are now acquiring generic companies, or spinning one off, to delve into this lucrative business. According to the Generic Pharmaceutical Association, brand-name companies make about half of the generic drugs on the market.