Explainer: What are generic drugs and why are they cheaper?
Drugs are primal parts of the chain of medical treatment that often makeup a substantial chunk of the final cost of healthcare, after the cost of diagnosis.
In this part of the world where encompassing health insurance coverage isn’t available to all, drugs can either restrict or widen access to healthcare depending on the nature of illness and cost of drugs.
Generic drugs have for decades played a leading role in the scope of making healthcare accessible to all for many reasons, when compared to drugs produced under brand names.
What are generic drugs?
When a drug is generic, it means it has been manufactured to function the same way as a drug originally produced and marketed by a brand name. It imitates the dosage form of branded drugs, safety, and potency, mode of administration, quality performance and intended use.
According to a 2016 issue of the World Health Organisation on drug information, generic medicines are those produced without a license from the innovator company when the patent or other market exclusivity rights on the innovator product have expired.
They can be considered as an equal substitute for its brand-name counterpart.
“Generic medicines can enable huge cost-savings as they create competition, driving down prices. In medicines regulation and in WHO prequalification, the efficacy of generics is demonstrated by bioequivalence studies,” WHO states.
Why are they cheaper?
Since producers of generic drugs do not need to redo animal and clinical (human) studies that were required of the brand-name medicines to demonstrate safety and effectiveness, generic drugs are often cheaper.
An analysis by the United States Food and Drug Administration shows that the reduction in upfront research costs mean that, although generic medicines have the same therapeutic effect as their branded counterparts, they are typically sold at substantial discounts, an estimated 80 to 85 percent less, compared with the price of the brand-name medicine.
According to the IMS Health Institute, generic drugs saved the U.S. healthcare system nearly $2.2 trillion from 2009 to 2019.
In another instance of the impact of generic drugs on antiretroviral (ARV) market by WHO, the median price per patient per year of first-line ARV therapy dropped from about $10 000 to less than $100 with the introduction of generic drugs, enabling the scaling-up of access to antiretroviral therapy from 0.5 million people on ARVs in 2003 to 15.8 million globally in 2015.
When multiple generic companies are approved to market a single product, more competition exists in the marketplace, which typically results in lower prices for patients.
Are there differences?
A generic drug may have certain minor differences from the brand-name product, such as different inactive ingredients, the FDA analysis explains.
There will always be a slight, but not medically significant, level of expected difference, just as there is for one batch of brand-name medicine compared with the next batch of brand-name product. This variability can and does occur during manufacturing, for both brand-name and generic medicines. When a medicine, generic or brand-name is mass-produced very small variations in purity, size, strength, and other parameters are permitted.
For example, a very large research comparing generics with brand-name medicines found that there were very small differences, approximately 3.5 percent in absorption into the body between generic and brand-name medicines.
Some generics were absorbed slightly more, some slightly less. This amount of difference is expected and clinically acceptable.
Is quality in LMIC at par?
A report by Health Action International describes constraints in demonstrating medicine quality in lower-middle-income countries (LMICs) as the challenge of implementing generic policies.
A key issue is the presence of substandard products on the market, the report said, stating that in a study undertaken more than a decade ago in Nigeria and Thailand, 36.5 percent of sample medicines were below pharmaceutical standards.
This was mainly attributed to poor manufacturing practices.