Is There a Difference Between Generic Drugs and Brand-Names?

Posted on Monday, May 06, 2019

Eight out of 10 prescriptions filled in America today are filled with generic drugs, and in the future, this figure will be even higher, according to experts. The migration from brand-name drugs to generics is being driven by several factors:

First, patents for a number of highly prescribed drugs are set to expire very soon - which makes them fair game for other manufacturers to produce as generics for potentially much lower prices. Second, insurance companies and managed care organizations, as well as corporations that self-insure - increasingly encourage medical plan participants to use generics, where available, as a cost-saving measure.

But are They Truly Equivalent?

Generally, yes. The Food and Drug Administration, the federal agency that regulates drug manufacturers, requires that generic drugs must be of equivalent quality, and they must perform the same function as the brand-name drugs. The standards are also applied to packaging standards.

The FDA's regulations have force: The agency monitors and enforces standards relating to the purity, quality, potency identity and strength of active ingredients. While there are inevitably some small inconsistencies in manufacturing processes, these deviations must be within strict limits as defined by the FDA. Generics sold in the U.S. must, therefore, have the same dosage, administration routes and active ingredients as the original brand.

The FDA monitors this, in part, by testing blood samples of people taking generic versions of a given drug and comparing the active ingredient content in the bloodstream to people taking the brand name version. So when you compare two drugs off the shelf at a retail or drug store, you can feel confident that the active ingredient listed on both boxes is the same, and should be processed roughly the same by the body, in that the absorption of the active ingredient into the bloodstream should be roughly the same for both versions.

Inactive ingredients, however, may vary. Still, most studies show that variation in inactive ingredients is not medically significant: The average difference in absorption rates between brand-name drugs and their generic equivalents, across 40 separate clinical trials, covering 2,000 people between 1996 and 2007, is less than four percent - well within the FDA's guidelines, which actually tolerate an absorption rate difference of up to 45 percent.

The Real Difference: Cost

On average, generic drugs save consumers about 80 and 85 percent off of the brand-name retail price prior to patent expiration. The reason for the high-cost of brand-name drugs, of course, is that pharmaceutical companies invest billions in new drug research and development and expensive testing before they can bring a new drug to market. The patent system, in return, gives them the exclusive right to manufacture and market a new drug long enough for them to recoup their investment in any given drug - plus a number of false starts on drugs that do not make it through the FDA process. However, generic manufacturers have not made the same investment in a drug, and therefore are able to manufacture it at a much lower cost than the original manufacture. The patent system attempts to strike a balance between encouraging and rewarding innovation and risk-taking on one-hand, and affordability on the other.

Generic drugs, on average, save Americans as much as $3 billion per week.

Meanwhile, the FDA continues to monitor generic drugs, and carefully tracks reported side effects that may occur when patients switch drugs. On the whole, however, Americans' experience with generics has been extremely successful, with very few negative medical consequences to report.

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Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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