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Generic Drugs
Does Inexpensive Mean Cheap?

by Robert S. Dinsmoor

Even though they are equivalent, however, generics and brand-name products cannot necessarily be freely interchanged. While the active ingredients may be identical, other components of the drug could make one pill behave slightly differently in the body than another pill. In particular, Dr. Setter says he would be cautious about substituting a generic drug for a brand-name drug that has a narrow therapeutic index—that is, a drug in which there isn’t much difference between a therapeutic dose and a potentially toxic one. These might include certain thyroid drugs, the blood thinner warfarin (brand name Coumadin), and the heart drug digoxin (Lanoxin). In the case of these drugs, small differences in the blood levels of these drugs can have harmful consequences.

Similarly, if a person is already taking a given drug, Dr. Setter would be cautious about switching that person from a brand name to a generic, or from a generic to a brand name, or from one generic to another. Again, the small differences between these different products could cause problems.

Bringing generics to market

The pharmaceutical industry can be a very lucrative business, but drug development is time-consuming, risky, and expensive. In 2003, the Tufts Center for the Study of Drug Development estimated it costs roughly $897 million to bring a new drug to the marketplace and perform postapproval safety studies. (Some consumer groups have criticized this figure as being inflated, claiming that it fails to take into account federal tax breaks and questioning the Center’s independence because it receives more than half of its budget from biotechnology and pharmaceutical companies.) All potential new medicines must be tested extensively in animals. If all goes well and the drug appears safe and effective in animals, it can then undergo large (and costly) clinical trials to prove that it is safe and effective in humans. To help drug companies recoup their investment, U.S. law grants drug developers a 20-year patent on a drug, during which time no other company can sell that drug. (Sometimes there is a lag between the time the patent is granted and the time the drug is first marketed, narrowing this window of opportunity.)

Although enabling drug companies to develop new drugs is important, so is enabling consumers to buy them. To that end, Congress in 1984 passed the Drug Price Competition and Patent Term Restoration Act, also known as the Hatch–Waxman Act, to speed up the entry of generic drugs onto the market once all the originating company’s patents on that drug have expired (or been successfully challenged in court). (Some drugs have multiple patents that cover different aspects of the drug, including routes of administration and the conditions the drug is approved to treat.) The act says, among other things, that instead of replicating expensive clinical trials on the same drug, manufacturers merely have to show that their drugs are bioequivalent to the pioneer brand-name drug. Under this law, the first company to market a generic copy of a given drug is also given a 6-month, “competition-free” period to market the drug. According to the FDA, this act essentially created the generic drug industry: Two decades ago, generics made up only 12% of prescriptions; today, they comprise about 51% of all prescriptions.

However, there was an unintended hitch in the law that made things difficult for generic drug manufacturers. Once a company had requested FDA approval for its generic version, the manufacturer of the original, brand-name drug could sue for patent infringement, and the FDA was not allowed to make a decision for 30 months while the patent infringement case was being settled in court. To make matters worse for would-be manufacturers of generic drugs, the brand-name manufacturer could use multiple, consecutive patent lawsuits to stall the generic’s approval even longer. In some cases, to prolong its monopoly on sales of a drug, the maker of a brand-name drug would actually pay another manufacturer not to bring its generic to market.

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