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

In the United States, we’re trained virtually from birth to value brand names — in fact, often to overvalue them.

Did you know, for example, that when large corporations buy one another, they often have to pay millions — or even billions — of dollars for something accountants call “intangible assets”? One of these assets — called “goodwill” — can be thought of as the value of the brand. It reflects the profits a company makes over and above what you’d expect from the tangible assets alone, simply because of its reputation.

Big pharmaceutical companies want you to buy into the value of brands when purchasing prescription medications — so you’ll pay more for them. That’s one of the reasons they spend so much on advertising.

The problem for Big Pharma, however, is that once a brand-name drug’s patent runs out, the value of the brand name (logically at least) is nil.

What would the value of Coca-Cola’s brand be if everyone were allowed to make soft drinks using Coke’s formula? How about if KFC had to share Colonel Sanders’ secret recipe? It would diminish quite a bit, wouldn’t it?

In the pharmaceutical business, once a drug’s patent runs out, the FDA (or equivalent regulatory bodies in Canada and elsewhere) basically allows the secret recipe for the drug to be given to other qualified drug makers, who create generic versions of the drug. Because the generic drug makers don’t spend billions of dollars on marketing, research and development, they can charge significantly less for the drug than the original drug manufacturer.

At that point, it just doesn’t make sense to buy the brand name version of the drug. It’s like paying for the designer label on your shirt rather than the shirt itself. And is ANYONE really impressed by the fact that you use brand-name drugs? (I didn’t think so.)

Two informative news reports over the past few days, one from KING5 in Seattle/Tacoma (looking at over-the-counter meds) and another from a pharmacist writing for an Ohio newspaper (focusing on prescription drugs), look into the difference between brand and generic drugs and come to the same conclusion: the only difference is the price.

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This is obviously why large pharmaceutical companies are now lobbying state legislatures to make it more difficult to substitute generic drugs for brand drugs when your doctor writes the name of the brand drug on your prescription. From Delmarva Now:

Pharmacists are usually authorized to automatically substitute generics for brand-name drugs — unless specifically instructed not to do so. Major drugmakers are fighting back by lobbying state legislatures to make it more difficult to make substitutions, seeking to require direct communication between doctor and pharmacist before making each switch. Maryland’s General Assembly considered two such bills during the 2008 legislative session and will likely see similar proposals in 2009.

While doctors may have legitimate reasons to prefer a brand-name drug, they also have the option to make that specification on a prescription. There is no need for a phone call to a busy doctor every time a prescription is filled.

This lobbying is an attempt to protect pharmaceutical profits by making it more difficult to purchase generic drugs. Since many insurance plans will not pay for a brand-name drug once the generic is available, this could end up costing patients a lot more –or forcing them to forego a medication altogether.

So don’t be fearful of generic drugs — and fight for your right to buy them if you need to. They’re not inferior to brand-name drugs; they just cost less.

About Cary Byrd

eDrugSearch founder, Cary Byrd, has been called an “e-health innovator” by MarketIntellNow, interviewed by top pharmaceutical industry journalists, invited to Matthew Holt’s Health 2.0 Conference and a Consumer Report's health summit, and highlighted on numerous health blogs.

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0 thoughts on “What’s the difference between brand-name and generic drugs?

  • james crowell says:

    generic drugs may decrease health care costs. However the F.D.A. requires to have a window of they need to be anywhere from 80% to 125% effective to be approved. There are some medical conditions like epilepsy or heart conditions that can’t risk that they need 100% to help control their conditions.
    Most insurance companies don’t realize this. How can it decrease health care costs if a person ends up making more trips to the hospital?

  • Arezu Sarvestani says:

    James Crowell, I think you’re mistaken about the efficacy of generic drugs. The following is taken directly from the FDA website:

    “1. What are generic drugs?

    A generic drug is a copy that is the same as a brand-name drug in dosage, safety, strength, how it is taken, quality, performance and intended use.

    2. Are generic drugs as safe as brand-name drugs?

    Yes. FDA requires that all drugs be safe and effective. Since generics use the same active ingredients and are shown to work the same way in the body, they have the same risks and benefits as their brand-name counterparts.

    3. Are generic drugs as strong as brand-name drugs?

    Yes. FDA requires generic drugs to have the same quality, strength, purity and stability as brand-name drugs.

    4. Do generic drugs take longer to work in the body?

    No. Generic drugs work in the same way and in the same amount of time as brand-name drugs.”

    The site also notes that nearly half of all generic drugs are made by brand-name companies themselves. There is no reason to believe that generic drugs are in any important aspect different from the brand named drugs.

    Here’s the FDA website where the information came from:

  • A given genric drug can be made by several different manufacturers. Their end product may not work as well as the brand name product. I tried generic zoloft after several years of using the brand name and generic does not work well for me. There’s definetly a difference I can feel emotionally. I wish there was no difference because the generic is far cheaper.

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