Why are brand name drugs more expensive?
A For one thing, companies spend millions of dollars developing new drugs, which involves screening promising candidates in the lab, then testing the drug on animals before moving on to small trials with human subjects. Finally, the companies conduct longer drug trials with more people. Also, companies making brand-name drugs devote a certain percentage of their budget to advertising, which can be expensive. Most importantly, companies protect their investment by filing for patents on new drugs as soon as they’re invented. But years later, once the patent has expired and the company has used up its right to extensions to keep manufacturing the drug exclusively, other companies can apply to the Food and Drug Administration to make a generic version. Without research costs to cover, these companies can sell the generic drug at closer to what it costs to manufacture.
Brand name drugs are more expensive than generics for two primary reasons. First and foremost, the manufacturers are trying to recover the research and development costs of the drug while they still own the patent. The second reason is that there are no drug price controls, meaning manufacturers can set their own prices.
For one thing, companies spend millions of dollars developing new drugs, which involves screening promising candidates in the lab, then testing the drug on animals before moving on to small trials with human subjects. Finally, the companies conduct longer drug trials with more people. Also, companies making brand-name drugs devote a certain percentage of their budget to advertising, which can be expensive. Most importantly, companies protect their investment by filing for patents on new drugs as soon as they’re invented. But years later, once the patent has expired and the company has used up its right to extensions to keep manufacturing the drug exclusively, other companies can apply to the Food and Drug Administration to make a generic version. Without research costs to cover, these companies can sell the generic drug at closer to what it costs to manufacture.
Brand name drugs are more expensive than generics for two primary reasons. First and foremost, the manufacturers have to recover the research and development costs of the drug while they still own the patent. Second, while a manufacturer owns a patent there are no drug price controls in place. Without the threat of competition, manufacturers are free to set their own prices.
