What is the difference between brand-name and generic drugs?
Generic drugs contain the same active ingredient as their brand-name counterparts. However, they usually cost much less than the brand-name version.
Before the Food and Drug Administration (FDA) approves a generic drug, the medication must meet rigorous approval standards. The FDA stipulates that the generic drug must be “pharmaceutically equivalent” to its brand-name version.
This ensures that generic drugs have the same purity, strength, stability, and quality as brand-name drugs.
However, not all brand-name drugs are available in a low-cost generic form.
Read on to learn how brand-name and generic drugs compare in price, appearance, availability, and more.
Fast facts
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Manufacturers formulate generic drugs to work the same way and provide the same benefits as their branded counterparts.
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Once a brand-name drug’s patent has expired, a drug company can file an “abbreviated new drug application” (ANDA)
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. This allows them to produce a generic version of the same drug.
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The generic drug must meet strict standards before the FDA will approve it.
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Researchers have found that many branded drugs have regular annual or biannual price increases
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.
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According to the FDA, generic drugs may cost 80–85%
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less than their brand-name equivalents.
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Anyone can search the Approved Drug Products with Therapeutic Equivalence Evaluations
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(also called the Orange Book) for FDA-approved drugs and patent information.
Price
Typically, generic drugs cost less than their brand-name equivalents. The price can be up to 85% less, according to the FDA.
There are several reasons for this.
Research costs
Generic drugs benefit from a reduction in upfront research costs.
Brand-name drugs have to go through expensive animal and clinical studies to prove their safety and efficacy. Generic drugs use the same active ingredients that the branded drugs carried out testing for, so they do not have to conduct the same testing. This saves the drug producers money, and consumers then benefit from these savings.
Competition
When more than one company produces a generic version of the same drug, there is more competition. Lower prices generally go hand-in-hand with more competition.
People are aware of these price differences, and it affects which medication they choose.
A cross-sectional study of 278 volunteers examined the participants’ understanding of generic drugs. The results showed that 88.8% of volunteers were aware that generic drugs are priced lower than brand-name drugs, and 80.2% claimed they chose generic drugs because of the lower price.
Appearance
Brand-name and generic drugs must contain the same active ingredient. However, characteristics of the drug not affecting the safety or efficacy may be different. This includes their appearance.
United States trademark laws do not allow generic drugs to look exactly the same as the equivalent brand-name drugs. However, the extent of these differences is regulated.
When a company wants approval to produce a generic drug, they need to file an “abbreviated new drug application,” or an ANDA. These are filed with the FDA’s Office of Generic Drugs (OGD). Generic drugs can have different physical characteristics than their brand-name equivalents.
Significant differences in characteristics such as size and color may:
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negatively affect a person’s compliance with treatment
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make it difficult for both doctors and their patients to identify the medication
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lead to the placebo effect, where a person believes that a treatment with no therapeutic value is working
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lead to the nocebo effect, where a person’s negative expectations of a treatment cause it to have a more negative effect on them
The OGD developed a guidance document to help generic drug manufacturers produce drugs similar in shape and size to their branded counterparts. It provides parameters from both manufacturing and safety standpoints.
Approval standards
The FDA requires generic drugs to meet a number of standards before approval. These include:
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The generic drug is “pharmaceutically equivalent” to the brand drug.
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The manufacturer can produce the generic drug both correctly and consistently.
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The generic drug has the same “active ingredient” as the brand drug.
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The correct amount of the active ingredient gets to the target area in the body.
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The ”inactive ingredients” in the generic drug are safe.
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The generic drug’s bottle, box, or other container is suitable.
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The generic drug’s label is the same as the brand drug’s label.
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The generic drug does not deteriorate over time.
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The legal exclusivities or patents have expired.
The drug company must submit an ANDA, which is an abbreviated new drug application. It states that the generic drug meets each standard.
Availability
People taking a particular drug may want to know if there is a cheaper generic option. There are several ways to find out if there is a generic version of a brand-name drug:
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Ask the prescribing doctor or pharmacist.
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Search for the drug using the FDA’s Drugs@FDA
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system. Search the brand-name drug first.
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Search for the drug using the online version of the Orange Book. Search the brand-name drug first.
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Check the FDA’s list of first-time generic drug approvals
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. This is where people can find “first generics” — the first time the drug gets FDA approval.
Which is better: Brand or generic?
According to the OGD, all FDA-approved generic drugs must meet the same quality, purity, strength, and stability requirements as their brand-name counterparts.
During a comparison study of U.S. health insurance claims, researchers found that branded and generic drugs had comparable medical results for chronic physical conditions. The conditions they looked at included hypertension, diabetes, osteoporosis, and psychiatric conditions such as anxiety and depression.
However, another analysis found that generic drugs may not have the same clinical impact for cardiovascular conditions.
Researchers analyzed reports from the scientific databases MEDLINE and EMBASE. They found that while 60% of the studies reported no difference between the drugs, the risk of hospital visits was higher in people taking the generic.
It is important to note that this study merely showed a correlation. It did not show that the generic drug played a role in the increased hospital visits.
People of lower socioeconomic status tend to have worse health outcomes than others. In addition, because they have less disposable income, they may be more likely to choose a generic over a brand-name drug. So one could conclude that some people taking the generic drug in larger numbers are already predisposed to worse health outcomes.
The study’s researchers also state there is not enough evidence to draw any firm conclusions.
When determining the better option between brand-name and generic drugs, a person’s healthcare professional may consider the specific health condition and current research when prescribing medication.
In a 2015 report, the American College of Physicians called for doctors to prescribe generic over brand-name drugs where possible.
Choosing brand-name or generic drugs
When choosing which drug to take, a person considers several factors.
Ultimately, it is up to the person and their healthcare professional to determine the best option among the brand-name and generic drugs available.
Quality
The drug company must submit an ANDA showing that the generic drug meets each FDA-required standard before the FDA will approve it. That includes showing that the generic drug is pharmaceutically equivalent to the branded medication.
Therefore, people can feel confident that the generic drug option is of the same quality as the brand-name version.
Attitude and intention
Researchers have found that three main categories form a person’s attitude toward, and intention to purchase, generic drugs. These are:
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Consumer attitude and behavior: This is a combination of a person’s beliefs and feelings about a product and their behavioral intention toward that product.
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Consumer views: These include a person’s and their healthcare professional’s views toward generic medicine.
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Risks: This includes the risks, if any, associated with the generic drug.
The researchers state that if the pharmaceutical industry, public health policymakers, and healthcare professionals better understood consumer attitudes and behavior toward generic medicine, they could help expand generic drug use.
Cost
In 2017, researchers conducted an economic evaluation of branded drug prices. It focused on 49 top-selling medicines that had more than 100,000 pharmacy claims that year.
Of these 49 brand-name drugs, 48 showed regular annual or biannual cost increases.
Generic drugs cost less than their brand-name equivalents. For some people, this cost difference is the deciding factor for whether they are able to take a much-needed medication.
Summary
Brand-name and generic drugs contain the same active ingredients in the same amounts. In most cases, they provide the same therapeutic benefits. Although more research is necessary to determine if branded drugs are better for certain conditions, the American College of Physicians says that doctors should prescribe the generic where it is available.
Because they do not have to undergo the same human and animal studies as brand-name drugs, FDA-approved generic drugs are significantly less expensive. This price difference influences some people’s decision to choose generic drugs over brand-name drugs.
However, it is advisable to discuss both brand and generic drug options with a healthcare professional. This allows a person to make the right decision for their health and personal circumstances.
Medically reviewed by Jennie Olopaade, PharmD, RPH — Written by Alicia Sparks Akers on June 28, 2021
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