Answer: Brand name medications can be produced and sold only by the pharmaceutical company holding the patent for that drug. The brand name drug has a trade name. For example, Lipitor is a brand medication and atorvastatin is the chemical name for the generic equivalent. Most drug patents are protected for 20 years. When the patent expires, manufacturers can apply to the FDA to sell generic versions. In order to receive FDA approval, generic drugs must: contain the same active ingredient; be the same strength; be the same dosage form (tablet, capsule, etc.); and have the same route of administration (oral, topical, injectable, etc.) as the brand name drug. Additionally, generic drugs must be "bioequivalent" to the brand name drug. Bioequivalence means the generic drug will work in the body in the same way and be as safe and effective as the brand name drug.

Why are generic drugs less expensive?

Bringing a drug to market is very costly. Estimates vary, and there is a lot of controversy surrounding the issue, but the pharmaceutical company that brings a brand drug to market has likely spent more than $800 million. Some estimates go as high as $1.3 billion.

What goes into this figure?

To understand the cost of a new drug, we must consider not only the cost of the new drug, but also factor in the drugs that were not brought to market, or the failures. The process of developing a drug is described as a series of phases. A drug may be developed to treat a specific disease or it may be discovered by accident. The initial phase of discovery involves chemists and pharmacologists who identify chemical and biological substances that are likely to have drug-like effects.

Very few new compounds identified during the discovery process are safe for testing in human volunteers. During the preclinical stage, an investigational drug is tested in the laboratory and must be proven safe for humans. Clinical testing consists of Phase I, Phase II and Phase III clinical studies. If preclinical and clinical testing is successful, a New Drug Application (NDA) is submitted to the FDA (in the U.S.). The NDA should provide enough information to permit the FDA to decide the drug is safe and effective. This is a lengthy process that can take as much as 10 years.

Because generic drug manufacturers do not need to "discover" the drug and go through pre-clinical and clinical studies, generic drugs are less expensive. In addition, generic drug manufacturers usually don't advertise and promote the product. The FDA generally approves a generic drug as soon as it is legal to do so, allowing consumers timely access to the generic products that are of the highest quality.

So, is there a difference between brand and generic medications? Generics are not identical to brand name drugs. The active ingredients are the same, but the inactive ingredients may vary. They may have a different shape, color, and flavor, but the safety and effectiveness of generic drugs is not compromised.