How The Patent Process Differs Between Brand Name & Generic Drugs

Generic alternatives to staple drugs have provided respite to the Americans that struggle to keep up with the rising costs of their name brand competition. While it’s wonderful to have access to such an alternative, you have to wonder: why is there such an immense difference in price between branded and generic drugs?

The infographic paired with this post tackles that topic head on. Of the information shared within the resource, one of the largest contributions to the difference in price comes from patenting process of these drugs. The process to acquire the patent for any drug is challenging. It requires a great deal of time and investment, which very well may fail in the long run as a majority of the companies who attempt to develop drugs are rarely successful. Despite the billions of dollars spent researching and developing new drugs, a majority of them won’t ever see the shelves of your local pharmacies. Patent protection was meant to provide the most to the companies that were willing to take this risk in developing such drugs. Without charging the prices that they charge, some drug manufacturers would fail to ever make back what they invested. If this were the norm, the world would be so much further behind in regards to medical development.

Regardless of this fact, the United States government realized very quickly that expecting people to pay for brand name drugs was not going to work. Which is why in 1984, they passed the Hatch-Waxman Act which allowed for generics to compete with brand name drugs after a set interval of time. The difference was that these generics wouldn’t have to pass the pre-clinical and clinical trials that their branded counterparts were required to do. Avoiding this requirement allowed generic drugs to enter the market at an accelerated rate, with much lower prices.

Generic drugs have two separate distinctions: non-authorized and authorized generics. An authorized generic drug is a generic created by the company responsible for the branded drug. In some cases, the original manufacturer may allow another company to manufacture their generic for them. A non-authorized generic is made separate from the original manufacturer. These non-authorized generics have been known to have stricter quality control and more frequent availability than the authorized generics. This plays a large role in customer preference with regards to drugs that require long time use.

Unfortunately, there will be instances of consumers forced to take branded drugs when no generic is available. Forecasting when a generic alternative might be available is very difficult. In some cases, it could only take a couple months. In more extreme cases, consumers may be forced to wait a decade. As awarded patents are honored for 20 years, drug companies even go so far as to further extend this protection through exclusive marketing rights from the FDA. While these companies would love to keep their drugs exclusive for as long as they can, the United States government has other plans. By allowing generic competitors to challenge these patents, the government is providing more and more chances for generics to become widely available at a much more accelerated rate than intended.

For more information on how the patent process for branded and generic drugs works, be sure to review the accompanying infographic coupled with this post. Courtesy of Rubin Anders