What does it mean for a pharmaceutical drug to change from branded to generic?
In: Economics
(this answer is limited to small molecule drugs; it’s a little different for biologic drugs)
To bring a drug to market you have to prove (among other things) safety and efficacy to the FDA. This requires clinical trials in humans. To even begin trials you need safety (and sometimes efficacy) studies in non-human models. Overall, these processes take years and are enormously expensive. A typical drug takes ~$1.5 billion to go through these processes.
Another company that wants to market this drug does not necessarily need to replicate these trials. They can instead rely on the first company’s safety and efficacy results, and instead prove the active ingredient they are using is identical and the formulation including the active ingredient is biosimilar. This is a generic drug.
There are three major hurdles to bringing a generic drug to market.
first, patents. Just filing a generic application can be a form of infringement (this is complicated, but basically, when the generic files, the brand-name company can immediately sue them).
Second, trade secret. Even if the generic company knows the exact active ingredient, figuring out the formulation can be complicated. You have to prove, for example, that your generic drug is just as soluble, just as bioavailable, etc. This can be difficult and costly to prove.
finally, regulatory. The FDA will not accept generic applications under certain conditions and/or will not allow you to rely on safety/efficacy results for certain periods. These exclusivities are built in as rewards for certain parties. For example, if you get a drug approved for treating a rare disease, even without a patent, the FDA will not accept generic applications for that disease for a period of time, giving you exclusivity in the market.
The drug doesn’t change. A branded drug is a drug produced by a specific manufacturer. These manufacturers typically have some sort of legal protections which allow them to sell the drug exclusively for a time. The idea being that drugs are expensive to discover, so companies that make new drugs need time to recover some of that cost.
Generic drugs are drugs produced after that exclusive period has expired. They have the same active component as the branded drug, but may include other things, like different fillers. Because generic drugs have to compete in an open market, but must also have the same effects as the branded drug, these generic companies have to produce the drugs at a cheaper cost to the consumer.
Tylenol is a brand. Acetaminophen is the drug. Generic is a chemically similar drug, or the same drug, just without the major brand name. Sometimes the small difference is import, sometimes it’s not. Usually when you receive a prescription it’ll indicate whether brand name is medically necessary or not.
It means that the patent has run out, and all drug manufacturers are now legally allowed to make and sell the drug instead of just the people who owned the patent.
A generic drug is typically much cheaper than a brand-name drug.
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