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Generic vs. Brand Drugs

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Written by:
Andrew Hall

Key Takeaways

  • Generic drugsA generic drug is an approved prescription drug that has the same active-ingredient formula as a brand name drug and is usually offered at a lower cost. are prescribed nearly 80% of the time and are 80-85% less expensive than brand drugsBrand name drugs are prescription drugs sold under a specific name or trademark. They have the same active ingredients as generic drugs but usually cost more. .
  • Generic drugs have the same active ingredients as their brand counterparts and must work with the same efficacy.
  • Due to trademark laws, generic drugs often look different than the brand drug they are modeled after.

Addressing the Skeptics

According to the U.S. Food and Drug Administration, nine in 10 prescriptions[i] filled in the United States are for generic drugs. Despite the frequency of use, is a little part of you skeptical of using “no-frills” drugs instead of their brand name counterparts?

The truth? Generic and brand drugs may be more similar than you think.

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Defining Generic Drugs

Generic drugs are essentially lower-cost versions of brand name drugs. According to the Food and Drug Administration (FDA), generic medicines use the same active ingredients as their brand name counterparts and work the same way. Because of this, they have the same risks and benefits. Contrary to popular belief, generic drugs are required to work in the same amount of time as the brand name drug they are modeled after.

For example, according to GoodRx.com:

“Using attention-deficit hyperactivity disorder (ADHD) and Type 2 diabetes as examples, individuals have the option to receive a generic or brand name prescription for daily treatment. Both brand and generic prescription options are the same strength, prescribed in the exact quantities, and have the same instructions for taking them.”

To determine whether you are taking a brand name or generic drug, you can look at your drug’s name. Typically, brand drugs are capitalized on a prescription or a pill bottle, while generics are not. Of course, it’s advisable to confirm your drug tier with your prescribing doctor.

Generic v. Brand Drugs

Generic drugs will often look different than their brand counterparts. Due to trademark laws, they cannot be identical (so they may have other shapes, packaging, color, flavoring, or inactive ingredients), but the active ingredients are the same.

The differences do not alter the effectiveness of a generic drug.

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Why do generic drugs cost less?

On average, the FDA says the cost of a generic drug is 80 to 85 percent lower than the brand name product. The reason generic drugs are so much cheaper is because the people making these drugs are not required to repeat the costly clinical trials of new drugs and generally do not pay for costly advertising, marketing, and promotion. In addition, when multiple companies begin producing and selling a generic drug, the competition among them drives the price down even further.

Fun fact: Many generic drugs are made in the same manufacturing plants as brand name drugs. The FDA estimates that 50% of generic drug production comes from brand name companies.

FAQs

Yes. To obtain approval of a generic drug, a company must submit an Abbreviated New Drug Application (ANDA) to the Food and Drug Administration (FDA)[i] and prove that its product is the same as the brand-name drug in the ways it works. The term is “bioequivalent,” and it means that generic works the same way and treats the part of the body intended by the brand-name drug.
No, not every brand drug has a generic version. Most brand drugs are developed and protected by patents for as much as 20 years before a generic version can be approved. When the patent expires, other drug companies can start selling a generic version of the drug. But, first, they must test the drug and the FDA must approve it.
Yes. Sometimes, when one drug isn’t offered as a generic, there may be another drug that can help you. The other drug may come as a generic. Providers and health plans suggest using generics. Ask your doctor to prescribe covered generic drugs, whenever possible, because it will save you money.

Sources

This website is operated by GoHealth, LLC., a licensed health insurance company. The website and its contents are for informational and educational purposes; helping people understand Medicare in a simple way. The purpose of this website is the solicitation of insurance. Contact will be made by a licensed insurance agent/producer or insurance company. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. Our mission is to help every American get better health insurance and save money.

Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.