Because companies wishing to sell the generic drug have much lower development costs (they do not have the high costs of marketing that brand names spent on advertising... the drug is already known), they can produce it at a lower unit cost, sell it for less and still make a profit on the sale. The FDA regulates manufacture of both brand-name and generic drugs and the overall quality should be comparable.
The difference between a brand-name product and a generic one is designed to be transparent. Once the patent life expires on a brand-name drug product, it is eligible to be made into a "generic drug." To do this, the generic drug manufacturer must ensure that the drug they are producing contains the same active ingredient(s) as the brand-name product, in the same dosage form, at the same dose or concentration, and for the same route of administration (for example, amoxicillin 500 milligram (oral) capsule). The drug may differ in color, shape, taste, inactive ingredients, preservatives and packaging, however. Because of these differences, the generic drug manufacturers are required to submit additional paperwork to the FDA to prove that their product is manufactured in accordance with good manufacturing practices (GMPs), and is as pure and stable as the brand-name product. Additionally, the generic needs to meet pharmacokinetic parameters in the body, which means it must dissolve (in a beaker) at the same rate and to the same extent as the original. This process ensures that the two products are bioequivalent because if product A and product B dissolve in a virtually identical manner, then they should behave the same in the body.
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