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Generic versus name brand drugs: What’s the difference?

Prescription drug prices — even with insurance or Medicare — can be very expensive for most Americans. According to GoodRx, 639 prescription drug prices increased by an average of 6% in 2020.

One big way consumers can save money on the cost of prescription drugs is by choosing generic over name-brand medications. And before you think generic drugs are of any less quality or less effective — think again. We did the research... and our findings might surprise you!

What’s the difference between generic and name-brand drugs?

The Food & Drug Administration (FDA) is the national governing body for all prescription drugs — overseeing both name brand and generic. This means generic drugs are basically the same as their better-known name-brand counterparts: same dosage, same strength, same directions for usage, same expected outcomes, and same expectations of safety.

The only differences? Drug name... oh right, and the price of the prescription.


Are generic prescription drugs safe?

According to the FDA, generic medicines work exactly the same as name-brand medicines, because they use the same active ingredients and work in the same way. This also means that they have the same risks and benefits as their brand-name equivalent.

The FDA has a special arm that oversees the rigorous review of generic drugs called the FDA Generic Drugs Program. In addition to ensuring generic drugs meet the same requirements as name-brand drugs, the Generic Drugs Program also inspects over 3,000 manufacturing plants every year.

So the FDA inspects all generic drugs (ensuring safety, effectiveness, and quality), the facilities where those drugs are manufactured, and investigates all reports of negative side effects or patient reactions to generic drugs. (If differences are detected in generic drugs, the FDA has the authority to recall drugs and make changes to their production.) 

Here are things the FDA looks for when inspecting generic drugs:

  • The active ingredient is the same as in the name-brand drug.

  • It has the same strength and directions for usage (tablet or injectable/oral or topical).

  • The drug is manufactured under the same strict standards as the name-brand medicine.

Why are generic drugs cheaper than name-brand drugs??

When generic drugs are introduced into the market (more on that below), they aren’t subject to the same rigorous long-term clinical testing as the initial name-brand because the ingredients in both the name-brand drug and generic are essentially the same.

With the reduction in research costs (again, research that has already been done on the name-brand drug), generic drugs can be sold at a much lower cost. This cost is even less when multiple generic companies market a medication and competition is greater.

Some generic medication is 85% less than the name brand.

This is not to say that generic drugs are not tested before they are made available to consumers. Like we said above, the FDA has to ensure the generic has the same active and inactive ingredients and is administered the same, but because the name-brand medication has already been tested for safety and effectiveness, testing is more concise on generic drugs. (We love efficiency.)

Why aren’t generic drugs always available?

There is a period of time after a new drug is introduced into the marketplace (usually after months or years of time in research, development, and testing required to be approved by the FDA) in which it is covered by patent protection. That means the name-brand drug company owns the exclusive rights to its manufacture and sale.

Once the patent period is over (or the patents are successfully challenged by a generic manufacturer), other drug companies can begin selling generic versions.

How many people use generic versus name-brand drugs?

In the U.S., 9 out of 10 prescriptions are for generic drugs. According to the FDA, increasing generic drug availability “Helps to create competition in the marketplace, which then helps to make treatment more affordable and increases access to healthcare for more patients.”

With the same FDA standards for both name-brand and generic drugs, it is easy to see why so many people use generic medication when available. Medical care can be very expensive and generic drugs give consumers a great cost-saving option.

One way you can save money on prescription drugs is to choose generic medications whenever they become available. Generic drugs are identical to their name-brand versions and fall under the same strict FDA guidelines for their research, development, and manufacture.

To save money on you and your family’s prescription drug needs, switch to the generic version of your prescription drugs as soon as they come on the market. Switching to generic drugs can save you hundreds — even thousands — of dollars per year. A year’s worth of a generic version of Nexium, for example, will save $756 annually.

It’s never too late to start saving on your prescription drugs. Even if you have an existing prescription for a name-brand medication, you can ask your doctor or pharmacist to let you know when generic versions become available. If you’re prescribed a name-brand prescription drug, but there is a generic one available, ask your doctor for a new prescription.

Read more about saving on your prescription drugs.

Tags: Health, Care, Prescription

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