Drug Debate: How Generic Medications Stack up Against Name Brands

by Contributor on Apr 24, 2012

If you have to take medications for an illness or injury, you know those medications aren’t free. You’ll pay for them out of pocket, through insurance and insurance deductibles, or through retirement funds such as Medicare Part D. While you might opt for the less expensive drug, such as a generic drug, are you compromising your health with that choice? Or, will Medicare or your insurance put up roadblocks to choosing a less expensive, but just as effective medication? What does your pharmacist have to say about your prescription, no matter if it’s a brand-name drug or a generic substitute? Learn more about what constitutes a generic drug, and whether they stack up against name brands.

Generic Drugs

MedicationsGeneric drugs are copies of brand-name drugs. They have the same dosage and strength, intended use, effects, side effects, administration instructions, risks and safety as name brand drugs. One way to tell the difference between a generic drug and a name brand is to look at the name of the drug. Brand names are capitalized, where generic names are not.

While some people are concerned that generic drugs are “less” of a drug than a name brand because of lower prices, the U.S. Food and Drug Administration (FDA) requires that generic drugs be as safe and as effective as the brand-name drugs that they copy. There is no truth in rumors that suggest generic drugs are manufactured in deficient laboratories or that they are created in non-sterile environments. The FDA applies the same standards for all drug manufacturing facilities, and many companies manufacture both brand-name and generic drugs. In fact, the FDA estimates that 50 percent of generic drug production is by brand-name companies.

The only reason that generic drugs are less expensive is because the manufacturers don’t have the expense involved in developing and marketing a new drug. When a company brings a new drug on the market, the costs can be astronomical. Drug developers spend money on:

  • Research and Development: Also known as drug discovery, this is the time when drugs are discovered or designed. The process of drug discovery involves the identification of candidates, synthesis, characterization, screening, and assays for therapeutic efficacy. Once a compound has shown its value in tests, a company will begin the process of drug development prior to clinical trials
  • Clinical Testing: This step allows a company to test the drug for safety and adverse reactions. These trials can take place only after satisfactory information has been gathered on the quality of the non-clinical safety, and Health Authority/Ethics Committee approval is granted in the country where the trial is taking place. Clinical trials are expensive, and a full series of tests may incur costs that cannot be borne by the company. Sometimes, an outsourced partner, such as a contract research organization (government, pharmaceutical or biotechnology company), will step in to pay for those trials.
  • Patent: The company and its partners then seek a patent that provides exclusive right to sell the drug as long as the patent is in effect. When that patent nears expiration, other manufacturers can apply to the FDA for permission to make and sell generic versions of the drug. Over the next decades, about 120 brand-name prescription drugs will lose their market exclusivity.
  • Marketing and Promotion: Nationwide, and sometimes global, marketing and promotion for brand-name drugs is expensive. Additionally, drug companies and manufacturers must follow strict protocol in marketing and promoting drugs, according to the FDA. This government agency also helps health care providers recognize misleading prescription drug promotion and provide them with an easy way to report this activity to the agency.

Trademark laws in the United States do not allow the generic drugs to look exactly like the brand-name preparation, but the active ingredients must be the same in both preparations, ensuring that both have the same medicinal effects.

Generic Medicines, Insurance, and Pharmacists

PharmacistGenerally, most insurance companies are not concerned with the type of medication you are taking or how much it costs. As long as you cover your deductible and are getting the health care you need, the insurance plan should agree with your health coverage. You probably need to check your health insurance coverage to make sure that your insurance covers medications as well as treatment outside medicines before you make any decisions about optional health care or before you become seriously ill. Sometimes, insurance companies do not cover preexisting conditions.

Medicare Part D, however, is a proponent [PDF] of generic medicines. Part D is not covered by government, so companies can set private plans to deliver the drug benefit and negotiate drug prices while competing with each other for enrollees. One important way to control costs is by negotiating with drug manufacturers for rebates. Another way to reduce costs is by managing enrollees’ use of prescription drugs. By using differences in co-payments and other methods, plans can encourage enrollees to switch from brand-name drugs to their less expensive generic equivalents. This practice is known as generic substitution.

The FDA recognizes this substitution practice, and condones it as long as the doctor writes that a substitution is appropriate on the prescription. A pharmacist, however, can make a substitution based upon the Approved Drug Products with Therapeutic Equivalence Evaluations, or the “Orange Book.” While this publication is not an official, legally binding regulation, states have issued laws that might elevate this book to legal status. All states in the U.S. have laws addressing generic substitution to one degree or another. Each state is different, and one state may not allow a pharmacist to substitute a generic for a brand-name drug, while another state may allow this substitution by a pharmacist.

Generic Medicines and Your Health Care

PrescriptionsWhen you receive treatment, and the doctor or nurse practitioner wants to prescribe medication for you, ask if an equivalent generic form of your brand-name medicine is available. You can also discuss the difference in price between the generic and brand name medicine, to rest assured that price, not quality, is the difference between a brand-name drug and its generic counterpart. Currently, not all medicines are available in a generic form, so your doctor may prescribe a medicine that is available only in the brand name form.

If you and your health care provider agree that a generic medicine is not the best choice for you, ask your doctor to write, “Do not substitute” on your prescription. This comment tells your pharmacist that only the brand name is to be used in filling the prescription. Depending on your health plan, you may have to pay more for, or cover the entire cost of, the brand-name prescription.