A generic drug is a drug which is
bioequivalent to a brand name drug with respect to
pharmacokinetic and pharmacodynamic properties, but are sold for
a lower price. Generic medicines must contain the same active
ingredient at the same strength as the "innovator" brand, be
bioequivalent; and are required to meet the same pharmacopoeial
requirements for the preparation. By extension, therefore,
generics are identical in dose, strength, route of
administration, safety, efficacy, and intended use.
The principal reason for the reduced cost of generic medicines
is that these are manufacturered by smaller pharmacuetical
companies which do not invest in research and development into
new drugs. The significant research and development costs
incurred by the large pharmaceutical companies in bringing a new
drug to the market is often cited as the reason for the high
cost of new agents - they wish to recover these costs before the
patent expires. Generic manufacturers do not incur these costs,
with bioequivalence testing and the actual manufacturing process
costing relatively little, and are able to charge significantly
lower than the "innovator" brand.
Generic drugs can be legally produced for drugs where the patent
has expired, for drugs which have never held patents, or in
countries where a patent is not in force. The expiration of a
patent removes the monopoly of the patent holder on drug sales
licensing. It is also becoming popular for the large
pharmaceutical companies to preempt the expiry of their patent
by producing their own generic product, or licence their own
product to be branded by generic companies. Thus, in some cases,
the "generic" product is actually the brand product but inside a
different box.
Some countries are considering amending legislation to allow the
manufacture of generic versions of AIDS drugs only for export to
developing countries. This compromise protects the rights of
patent holders in the home country while meeting the needs of
developing countries for inexpensive medications.
