The underlying intent of the Hatch–Waxman Act was to save health-care dollars by speeding generic drugs to the marketplace, but it became clear that because of these legal loopholes, it wasn’t having the intended effect. On June 12, 2003, Tommy G. Thompson, then Secretary of the U.S. Department of Health and Human Services, announced new FDA regulations to help close these loopholes, streamline the process, make generic drugs available to consumers, and save money. According to the FDA, the average brand-name prescription drug costs about $72, while generic versions average about $17. These revisions could save consumers an estimated $35 billion over 10 years. Central to the regulations was limiting the original brand-name company to only one 30-month delay of a generic drug’s approval for resolving the patent challenge.
According to Dr. Setter, drugs sometimes become available as generic drugs outside the United States before they become available within the United States. In fact, some U.S. residents travel to Canada or Mexico to buy medicines or buy medicines from foreign countries over the Internet because drugs tend to be less expensive outside the United States. However, it is illegal to import prescription medicines from outside the United States. (Some drugs that are manufactured abroad are approved for sale in the United States by the FDA because they meet the same standards as American-based products. An example is insulin made by the Danish company Novo Nordisk Pharmaceuticals, Inc.) The FDA also warns that these drugs may be unsafe because other countries may not have the same strict regulatory guidelines as the FDA. Yet these laws are difficult to enforce, and many people continue to buy drugs this way.
Consumers and medical professionals alike get mixed messages regarding brand-name and generic drugs. On the one hand, drug companies spend huge sums of money promoting their newest—and therefore costliest—drugs. On the other, managed-care companies offer incentives to doctors to prescribe generic drugs and to consumers to buy them.
Drug company promotion may take a number of forms, including drug advertisements directed both to medical professionals and consumers, ghostwritten journal articles paid for by drug companies, journal supplements sponsored by drug companies, and medical meetings sponsored by drug companies, in which the company’s own product tends to take center stage. Ads aimed directly to consumers can be particularly effective because consumers often pressure their doctors to prescribe widely promoted—and expensive—drugs without realizing that there are equally effective, less expensive drugs (either generic or brand-name) that would treat their condition just as well. Similarly, pharmaceutical representatives often give free samples of drugs to doctors to pass along to their patients and, again, these tend to be expensive brand-name drugs rather than inexpensive generic drugs.
“The pharmaceutical industry is a big advertising and promotional machine that pushes the latest, greatest drugs—and, in some cases, tries to put out negative marketing about older drugs that are less expensive, including older drugs that are available as generics,” observes Kenneth A. Krutt, M.D., Senior Staff Internist at the Lahey Clinic–Arlington and Assistant Clinical Professor of Medicine at Tufts University School of Medicine in Boston, Massachusetts.
According to Dr. Krutt, generic drugs are often prescribed to save money. “HMOs tend to have incentives for doctors to write more generic prescriptions unless the brand-name version is warranted for health reasons,” he says.
Often, there are financial incentives for consumers as well: In many health insurance plans, the co-payment for generic drugs is substantially lower than for brand-name drugs.