Drugs sold as a cheaper alternative to brand named products are called save on prescriptions. Usually, generic drug companies cannot patent their active ingredients, but they can patent their own unique formulation.
The Food and Drug Administration of the United States of America governs all medications and according to them the generic drug is identical to the brand named drug, legally. Therefore, the same laws apply to generic drugs as their branded counterparts where strength, administration and safety are concerned. The cheap generic drugs must contain the same active ingredient as the branded product and be within acceptable bioequivalent ranges.
Once the patent expires on a branded drug, generic drugs can be introduced into the market. This leads to competition on the market which brings down the price of both the generic and the branded drug.
American drug patents generally last 20 years, but manufacturers have to apply for the patent before starting with clinical trials. Hence, the active period of the patent is usually only about seven to twelve years.
Once a patent no longer protects a drug, generic drug companies can develop a similar product for a lot cheaper. This saves a lot of money for the generic company and enables them to market the product for a lot cheaper, hence the savings are passed onto health insurers and patients. Generic meds can be distributed within developing countries for a lot cheaper than the named brands.
Many countries are importing generic medicine from India, the world’s leader in generic drug manufacturing. Reverse engineering is applied to known drug compositions to create bioequivalent counterparts thereof. Since drug testing has taken place by means of clinical trials performed by the brand name, generic manufacturers don’t have to prove the efficacy and safety of the generic drug.
Marketing campaigns of brand name drug manufacturers also benefit the generic manufacturers. Since the brand name product has probably been in the market for around a decade, it is well known to the consumers, as well as doctors and pharmacists. It is easy for a health care professional to suggest a generic brand to their patient.
Branded products monopolize the industry while the patent applies and this allows them to price the product as they wish to maximize profits. In doing this, they produce funds to research and create additional drugs, which generic med companies lack the funds for.
Legally, generic drugs can be produced in the instances where either the brand name’s patent has expired, when the generic manufacturer can certify that the brand name’s patents are invalid, for drugs that have never held patents, or where the country does not enforce drug patents. Certain patents may only apply in certain countries.
Market monopoly is removed when a patent expires and they are generally not renewable. If a brand name company changes their formulation drastically, they have to apply for a new patent. New clinical trials will have to be performed. While this happens, the generic drug can still be sold unless it is removed from the shelves by regulators of the FDA.
Developing countries import cheap generic drugs to distribute in their countries at low cost; hence they are welcomed by healthcare professionals and patients alike.