Why are generic drugs less expensive than brand name drugs?
Generic drugs prices are lower than those for brand name drugs due to peculiarity of the existing patent system. The patent system stipulates that most new drugs after being introduced for the very first time, are regulated and protected by the government during 17 years, and this deprives other companies of the right to distribute and sell these drugs. Thus, the company which initially developed this drug is given the right to solely market its product and 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. In case the patent term expires, the Food and Drug Administration, upon the application of a company, may grant permission to sell generic versions of the drug. Competing companies can also sell the drugs for 50-80 % les than the brand name cost as there is no need to be concerned about investment costs.
