When a drug patent expires, other pharmaceutical companies can begin producing generic versions of the drugs. These products provide many economic advantages to consumers in both developed and developing countries, insurance companies, other pharmaceutical business and public health.
Economic Advantages of Generic Drugs
The biggest benefit that generic drugs provide is economic benefits. Most of the cost of any new drug lies in the research and development of the product. A generic drug allows a company to reverse-engineer an existing product and manufactures it under a non-trademarked name. This eliminates the lengthy, expensive process of researching and designing a new drug, which is often touted to cost $800 million.
This saves health care insurers billions of dollars each year. One study cites the savings at $734 billion over the past decade alone. These savings translate into lower insurance costs for businesses that provide health insurers and lower co-pays for patients buying these drugs.
Moreover, these savings get passed on directly to the consumer, even those lacking health insurance. n average, name brand drugs cost 50 to 70 percent more than the same generic drug and are more widely available than the name-brand counterparts.
Benefits to Public Health
In addition to saving consumers money, generic brand drugs also make needed medicines widely available to populations that could not previously afford them. For instance, Thailand has begun importing the generic version of the blood-thinning and heart-attack reducing drug Plavix from India at a cost of 3 cents per dose.
According to Thailand’s health ministry, less than 10 percent of the 300,000 heart disease patients there can afford to buy Plavix. This represents a major improvement in public health in Thailand, where, heart disease is the second leading killer. In developing or impoverished nations around the world, HIV-positive patients who cannot afford the expensive name-brand pharmaceuticals available in Western nations can purchase much cheaper generic versions that prolong their lives with similar efficacy.
Safety of Generic Drugs
Generic drugs are just as safe as the trademarked “name brand” drugs for which they substitute. The FDA requires any generic drug to undergo clinical trials, both to prove safety and efficacy. Also, generic drugs must provide patients with “bio equivalent” results to the name-brand product they replace, meaning that the generic drug must achieve the same results as the drug it copies (within a certain range of statistical tolerance).