Why are generic drugs cheaper?
A.They’re less expensive because of the patent system. When they are first introduced, most new drugs are patent-protected by the government for 17 years. During that time, other companies can’t sell the drug. This allows the company that developed the drug to market it exclusively and make back the research money that was spent to develop it. When the patent runs out, drug companies can apply to the Food and Drug Administration to sell generic versions of the drug. And because they don’t have to worry about investment costs, the competing companies can often sell the drug for 50 percent to 80 percent less than the cost of the brand name.
The cost of research, development and marketing a new drug – including the money spent advertising the product- must be recouped by the manufacurer of the branded drug. These costs can be very high which is why branded drugs are often more expensive than generics. Generic manufacturers do not face these expenses to the same extent and can therefore afford to sell their product for less money.
