Why Generic Drugs Are Discount Prescription Drugs
Savings From Discount Prescription Drugs
Generics (discount prescription drugs) are widely considered to be cheap drugs when compared to their brand name equivalents. Indeed, the statistics support the view that generics are cheap drugs!
In the US in 2000, 42% of prescriptions were filled with discount prescription drugs (generics). This volume, however, represented only 8% of the total dollar value of the drugs dispensed that year. These figures clearly illustrate the huge savings possible when health professionals and patients choose to use generic discount prescription drugs (1).
Moreover, the average price of a generic prescription drug was $19.33, while the average price of a brand name drug was $65.29 in the US in 2000 (2). This represents significant savings at a personal level. Using cheap drugs, therefore, has the potential to save individuals hundreds of dollars each year, and yet these discount prescription drugs have been proven to provide exactly the same medical benefits as
their brand name equivalents.
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The Reason Generics Are Cheap Drugs
Original brand name drugs usually have 20 years patent protection from initial discovery of the molecule before copy discount drugs can also be marketed. However, research has shown that the average new drug takes 12 years to develop and costs $US270 million from initial discovery to public release (1). This may mean that the original manufacturer has only a few short years of exclusivity in the market, before
copy discount drugs are introduced.
Manufacturers of brand name products must therefore charge a price that will recoup the research and development costs of their new drug when it finally reaches the market. In addition to the costs of research and development, there are also other large cost that must be incurred to sell a new drug, such as the cost of promoting the product and educating medical professions in its use.
The costs associated with the research, development and marketing of a new drug are the main reasons for the price difference between brand name drugs and the discount drugs that follow when their patents have expired. Without the need for these large initial investments, a company that manufactures generic products can basically make copies of original brand drugs and provide these as cheap drugs for patients.
1. D&MD Publications, Report 9043 (Executive Summary), 2002
2. Mullins, CD et al, "A background report prepared for the Department of Health and Human Services' Conference on Pharmaceutical Pricing Practices, Utilization and Costs", August 8-9 2000.
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