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Last updated: Mar 15, 2022
6 min read

Generic vs. brand name drugs: what’s the difference?

Disclaimer

If you have any medical questions or concerns, please talk to your healthcare provider. The articles on Health Guide are underpinned by peer-reviewed research and information drawn from medical societies and governmental agencies. However, they are not a substitute for professional medical advice, diagnosis, or treatment.

About 90% of prescriptions in the United States are generic drugs. These lower-cost versions have saved people over one trillion dollars in the last decade—and they’ve likely saved lives as well. 

Studies show that those who can afford medications are less likely to skip taking them, resulting in better outcomes (Gupta, 2019; Sacks, 2020). Because generics are cheaper, you may be wondering why people use brand-name drugs. Are they any different from their generic counterparts?

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What’s the difference between brand name and generic drugs?

There are a few differences between generic and brand name drugs:

  • Cost: Generics can be as much as 85% cheaper than name brand medications (FDA, 2021) 
  • Inactive ingredients: While their active ingredients are the same, they can have different inactive ingredients like fillers, dyes, and preservatives.
  • Packaging, color, and shape: Brand name and generic drugs differ in packaging and may differ in color and shape.
  • Different manufacturers: Generic drugs can have many different manufacturers, whereas one specific company typically makes the brand name version.
  • Absorption time: How fast your body absorbs a drug can vary slightly between brand name and generic drugs based on the fillers they contain.

Why are brand name drugs more expensive? 

Brand name drugs are so expensive because it costs pharmaceutical companies around a billion dollars to bring a drug to market. And it often costs even more for specialty drugs like cancer medications (Wouters, 2020). 

To cover the costs of research, testing, marketing, and to allow for profits from a drug, brand name drug makers charge more. They also have annual price increases, putting them out of reach for many Americans (Wineinger, 2019). 

In order to encourage drug makers to continue developing new drugs, they are granted patents that give them exclusive rights to the formula for a certain amount of time. When the patent runs out, any certified drug manufacturer can produce the medication as a generic drug. These generic medications have to undergo the same stringent testing as the brand name options to ensure they are as equally safe and effective (FDA, 2022). 

Why do generic drugs cost less? 

Since the substance itself is often not very costly, once a patent expires and other manufacturers start producing a drug, the manufacturing costs them much less, allowing them to pass those savings on to consumers. As more companies produce the drug, competition increases, further driving down costs for consumers (Mishuk, 2020).

Are generic drugs safe?

The U.S. Food and Drug Administration (FDA) has a strict approval process for generic drug manufacturers and tests them using the same methods as brand name ones. The FDA requires generic drugs to work the same way and provide the same benefits as their branded counterparts (FDA-a, 2017). 

Brand name and generic drugs are also required to have the same active ingredients, strength and dosage, and route of administration (FDA, 2021). 

This means if the brand name drug is a tablet, the generic should be a tablet. An example is the antidepressant bupropion, which is the generic for Wellbutrin. Both come in tablet form. 

But, the FDA still wants you to be aware that one tablet is generic and the other is a name brand; this is why generic drugs look a little different and have different packaging so that you can tell them apart. 

While generic and name brand drugs have the same active ingredients, their inactive components may differ. Inactive ingredients can include fillers, binders, flavors, colors, and preservatives. Medications require fillers because active ingredients can be super small—the size of a few grains of salt in some cases. 

Fillers and other inactive ingredients can vary as long as they don’t change how the drug works. These inactive ingredients can create some differences. In rare cases, they can cause side effects (like an allergic reaction) or change how quickly a drug takes effect (FDA, 2021). 

Are generic medications less effective?

Generic medications are just as effective as brand name drugs and go through rigorous testing before they’re approved. 

Studies of people with chronic conditions like diabetes, hypertension, osteoporosis, depression, and anxiety show that generic drugs have the same effects on health outcomes as brand name options (Desai, 2019). You’ve probably experienced the effectiveness of generic medications firsthand. For instance, maybe you take store-brand ibuprofen instead of Advil, or store-brand acetaminophen instead of Tylenol to alleviate back pain or a headache. 

While it’s clear that generic drugs work similarly to brand-name medications, there is one caveat, and it’s something called “bioequivalence.”

When to choose brand name drugs over generic

Not all drugs have a generic equivalent. This is true when a drug patent hasn’t yet expired. 

Additionally, your healthcare provider may recommend a brand name drug if your symptoms worsen, you don’t respond to the generic, or if you have an adverse reaction while taking the generic.

That said, some medications require a lot of consideration before switching to the brand name versions (or vice versa). Some drugs have a narrow therapeutic index, meaning you need a specific dosage to get the desired effects. Any deviation from that range can cause serious and even deadly side effects. 

Examples of drugs with a narrow therapeutic index include some seizure drugs, blood thinners, lithium, and thyroid medications. 

Since drugs with a narrow therapeutic index carry greater risks related to dosing, the drugs may not be as easily interchangeable––that’s why a healthcare provider may prefer you use one version over the other (FDA-b, 2017).   

Will my insurance pay for brand name drugs?

While it depends on the drug, insurance companies often cover the cost of brand name products that don’t have a generic version. But if a generic is available, a healthcare provider may prescribe or suggest it as a lower-cost option as insurance may be more likely to cover it (Choudhry, 2016). 

However, insurance companies may steer patients toward a brand name drug or accept a medical provider’s appeal to go with a brand name medication. If you do end up with a brand name prescription, your copay for that version may be higher.

Ultimately, it’s best to work closely with your healthcare provider about what’s best for you and check with your health insurance company for details about what prescription drugs your plan covers. 

References

  1. Choudhry, N. K., Denberg, T. D., & Qaseem, A. (2015). Improving adherence to therapy and clinical outcomes while containing costs: Opportunities from the greater use of generic medications: Best practice advice from the Clinical Guidelines Committee of the American College of Physicians. Annals of Internal Medicine, 164(1), 41. doi:10.7326/m14-2427. Retrieved from https://www.acpjournals.org/doi/10.7326/M14-2427 
  2. Chow, S. C. (2014). Bioavailability and bioequivalence in drug development. Wiley Interdisciplinary Reviews: Computational Statistics, 6(4), 304–312. doi:10.1002/wics.1310. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4157693/ 
  3. Desai, R. J., Sarpatwari, A., Dejene, S., Khan, N. F., Lii, J., Rogers, J. R., et al. (2019). Comparative effectiveness of generic and brand-name medication use: A database study of US Health Insurance claims. PLOS Medicine, 16(3). doi:10.1371/journal.pmed.1002763. Retrieved from https://pubmed.ncbi.nlm.nih.gov/30865626/ 
  4. Gupta, R., Shah, N. D., & Ross, J. S. (2019). Generic Drugs in the United States: Policies to address pricing and competition. Clinical Pharmacology & Therapeutics, 105(2), 329–337. doi:10.1002/cpt.1314. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6355356/
  5. Mishuk, A. U., Fasina, I., & Qian, J. (2020). Impact of U.S. federal and state generic drug policies on drug use, spending, and patient outcomes: A systematic review. Research in Social and Administrative Pharmacy, 16(6), 736–745. doi:10.1016/j.sapharm.2019.08.031. Retrieved from https://pubmed.ncbi.nlm.nih.gov/31445986/ 
  6. Sacks, C. A., Van de Wiele, V. L., Fulchino, L. A., Patel, L., Kesselheim, A. S., & Sarpatwari, A. (2021). Assessment of variation in state regulation of generic drug and interchangeable biologic substitutions. JAMA Internal Medicine, 181(1), 16. doi:10.1001/jamainternmed.2020.3588. Retrieved from https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2769770 
  7. Straka, R. J., Keohane, D. J., & Liu, L. Z. (2017). Potential clinical and economic impact of switching branded medications to generics. American Journal of Therapeutics, 24(3). doi:10.1097/mjt.0000000000000282. Retrieved from https://journals.lww.com/americantherapeutics/FullText/2017/05000/Potential_Clinical_and_Economic_Impact_of.6.aspx
  8. U.S. Food and Drug Administration (FDA-a). (2017). What is the approval process for generic drugs?. Retrieved February 28, 2022 from https://www.fda.gov/drugs/generic-drugs/what-approval-process-generic-drugs 
  9. U.S. Food and Drug Administration (FDA-b). (2017). FY2015 Regulatory Science Research Report: Narrow therapeutic index drugs. Retrieved Feb. 28, 2022 from https://www.fda.gov/industry/generic-drug-user-fee-amendments/fy2015-regulatory-science-research-report-narrow-therapeutic-index-drugs#:~:text=Introduction,or%20significant%20disability%20or%20incapacity 
  10. U.S. Food and Drug Administration (FDA). (2021). Generic Drugs: Questions & Answers. Retrieved Feb. 28, 2022 from https://www.fda.gov/drugs/frequently-asked-questions-popular-topics/generic-drugs-questions-answers#q3
  11. U.S. Food and Drug Administration (FDA). (2022) Abbreviated new drug application (ANDA): Generics. Retrieved Feb. 28, 2022 from https://www.fda.gov/drugs/types-applications/abbreviated-new-drug-application-anda
  12. Wineinger, N. E., Zhang, Y., & Topol, E. J. (2019). Trends in prices of popular brand-name prescription drugs in the United States. JAMA Network Open, 2(5). doi:10.1001/jamanetworkopen.2019.4791. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6547085/ 
  13. Wouters, O. J., McKee, M., & Luyten, J. (2020). Estimated research and development investment needed to bring a new medicine to market, 2009-2018. JAMA, 323(9), 844. doi:10.1001/jama.2020.1166. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7054832/ 
  14. Ye, L. J., Li, B., Ling, N. M., Gao, Y., Tao, X. X., Cai, S. F., et al. (2021). Pharmacokinetics and bioequivalence of a generic fixed‐dose combination tablet of metformin hydrochloride/vildagliptin versus a branded product in healthy Chinese subjects under fed and fasting conditions. Clinical Pharmacology in Drug Development, 11(1), 63–70. doi:10.1002/cpdd.992. Retrieved from  https://pubmed.ncbi.nlm.nih.gov/34273258/