The main reason why generics are less expensive than branded medications has nothing to do with quality, but rather has to do with research and development. Discovering new drugs can cost hundreds of millions of dollars, which gets factored into the cost of the drug. The FDA allows a specified time period during which the product innovator can market without generic competition. This allows the innovator to recover their development costs before lower cost generics enter the market. Generic manufacturers do not discover new drugs. Instead, they use FDA-approved formulas. By using the same active ingredients, they produce products which are identical (equivalent) to the branded medication. These cost savings are passed on to the consumer
Generic pharmaceuticals are identical (bioequivalent) to the branded medications with regard to:
Generic pharmaceuticals must:
It is estimated that generic drugs save U.S. consumers $8 to $10 billion per year.
*According to the U.S. congressional budget office