When a drug company develops a new medication it invests money in scientific research. Discovery, development and testing over a period of time takes a large investment in time and money. Generic drugs do not incur that expense. The company that does all this has what is called a patent on that drug.
The Federal Drug Administration imposes a time limit on the patent. The length of time one remains in effect varies from country to country. Once the patent has expired, other manufacturers are entitled to produce a generic version of the drug.
All generics are required to have the same ingredients the original formula contained. Requirements are put in place by the Federal Drug Administration. A generic version must contain the same or nearly the same active ingredients as the original brand name does.
Generic drugs are low cost compared to the original for two reasons. First, they are a copy of the original company’s formula. Second, more than one additional drug company is entitled to produce it.
Where competition exists, price goes down. The generic producers compete for the consumer’s dollar and it keeps prices low. It is only natural for a consumer to buy the cheaper product as long as the quality is maintained.
It costs much less to produce generic drugs in some countries. India is the biggest producer of generic drugs. This is because people work for wages that are minimal compared to wages in the United States.
The United States President signed a new law on March 23, 2010. The FDA is required to approve all generic formulas prior to their sale. The original producer has twelve years of exclusive rights protected by patent law. After that generic versions can be produced and sold to the public. This law is named the Patient Protection and Affordable Care Act.
More generics are sold in the US than any other single country. When the patent protection expires on current brand name drugs, a large portion of them will be produced as generics. Generics medications already have approximately 78% of the US pharmaceuticals market. The implications of this fact on the market are yet to be seen.
All prescription drugs cost money to ensure safe manufacturing. One component of the cost of pharmaceuticals is the high cost of advertising on TV. It is obvious that the profit margin is higher as a result of those expenditures.
The cost is high for advertising. It does not point out to the consumers that generics can be produced in India for a portion of the cost it takes to produce them in the US. The large drug manufacturers have factories in India. These drugs are made safely at a fraction of what consumers pay for them. Yet, they imply it is unsafe to buy drugs from overseas.
The fact is that Indian law imposes a death penalty on any drug manufacturer in their country who produces unsafe generic drugs. The same penalty covers any company that deliberately produces any drug that is harmful to the people who take it. This kind of regulation keeps us all safe.