Why are generic pills cheaper than the brand name ones?
The principal reason for the reduced price of generic medicines is that the creation of the generic drug runs up less cost and therefore a lower price can be offered and still maintain profitability. Manufacturers of generic drugs are mainly able to avoid the following three costs that brand name pharmaceutical companies incur: (1) costs associated with the research and development of the drug; (2) costs associated obtaining regulatory approval (i.e. proving safety and efficacy of a drug); and (3) marketing costs. First, Generic manufacturers do not incur the cost of drug discovery and instead reverse-engineer existing brand name drugs to allow them to manufacture bioequivalent versions. Second, generic manufacturers do not bear the burden of proving the safety and efficacy of the drugs through clinical trials – rather, generic manufacturers must prove the generic drug’s bioequivalancy to the existing drug. Third, these companies receive the large benefit of the marketing and advertisi
