Why Generic Medicines Cost Less
If there is one thing people know about generic medicines, it is that it costs less than branded ones. This is true for most cases, but it may come as a surprise for you to learn that some generic medicines might cost more than branded ones. In order to understand how this happens, you need to know why generic drugs cost less in the first place.
Branded drugs are often the first of their kind. Pharmaceutical companies that manufacture them have to spend millions of dollars and conduct of years of research to create them, so it makes sense for them to patent their drug. This patent protects the investment of the company, so no other manufacturer is allowed to sell the drug legally for a fixed time, which is generally around 17 years. This drug, which is also known as the ‘innovator’ drug, is priced high so that the company can make up for the costs incurred in researching the drug, making it, testing it to make it safe, and marketing and transporting it. If it is the first drug to cure a certain condition, a premium will be added to it.
The high cost of the branded drug continues until the patent expires. At this point, other companies are allowed to make and sell the same drug after receiving permission from the F.D.A. In order to get permission, however, the manufacturers have to change the shape and appearance of the drug and market it in a different name. Despite these changes, manufacturers can still benefit from making generic drugs because they do not have to spend any money on research. With zero costs for original research and testing, generic drugs can be sold at a lower cost and the company can still incur a profit.
Surprisingly, you may not always find generic drugs to be the cheapest. Some insurance companies tie up with manufacturers to procure branded medicines at lower costs. Therefore, before you buy a generic drug, it is advisable to check your insurance to see if a branded drug is cheaper or not. In all other cases, however, generic medicines always cost lesser than branded ones.
Branded drugs are often the first of their kind. Pharmaceutical companies that manufacture them have to spend millions of dollars and conduct of years of research to create them, so it makes sense for them to patent their drug. This patent protects the investment of the company, so no other manufacturer is allowed to sell the drug legally for a fixed time, which is generally around 17 years. This drug, which is also known as the ‘innovator’ drug, is priced high so that the company can make up for the costs incurred in researching the drug, making it, testing it to make it safe, and marketing and transporting it. If it is the first drug to cure a certain condition, a premium will be added to it.
The high cost of the branded drug continues until the patent expires. At this point, other companies are allowed to make and sell the same drug after receiving permission from the F.D.A. In order to get permission, however, the manufacturers have to change the shape and appearance of the drug and market it in a different name. Despite these changes, manufacturers can still benefit from making generic drugs because they do not have to spend any money on research. With zero costs for original research and testing, generic drugs can be sold at a lower cost and the company can still incur a profit.
Surprisingly, you may not always find generic drugs to be the cheapest. Some insurance companies tie up with manufacturers to procure branded medicines at lower costs. Therefore, before you buy a generic drug, it is advisable to check your insurance to see if a branded drug is cheaper or not. In all other cases, however, generic medicines always cost lesser than branded ones.