Why are generic drugs cheaper than brand name drugs?
A brand name drug has to go through 10-15 years of research and testing in animals and people before it can be sold to the public.
During this testing, the company making the drug must prove that it is safe and effective for people to use. All of this testing can cost over $1 billion. Once the new drug is approved, the company that made and tested it receives a patent. This means that no other company can make the drug until the end of the patent, which is usually 10-15 years after the drug is released.
When a patent for a brand name drug expires, any other company can copy the drug and sell a generic version. These other companies must only prove that their product is the same as the brand name drug.
This means that generic drug companies do not have to spend as much time and money because they do not have to invent or test the drug for safety and get FDA-approval. This is why generic drugs cost less.
When a patent for a brand name drug expires, there are usually a number of companies that begin to make a generic version of the drug. Since there is more than one company making the drug, the price is lowered even farther due to competition between all of the different generic drug makers.
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