Last updated: September 28, 2019
Topic: BusinessMarketing
Sample donated:

A Branded drug company invests a batch of money on the research and development of a new drug.

After the find of a lead compound and before carry oning the clinical tests, the company can use for a patent. Once the patent is obtained, the company gets sole rights to fabricate the drug and to except other companies from fabricating the drug. The branded drug company enjoys the monopoly of fabrication and marketing the drug until the patent expires. The cost of a branded drug is really high as the company tries to retrieve the money invested in the research, development and selling of the drug. Once the patent has expired.

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, generic drugs enter in to the market. Are these generic drugs as safe and effectual as the branded drugs? Yes they are. Then why are they so much cheaper than the branded drug? Because, unlike the branded drug company, generic drug companies need non put a batch of money on research and development and their overall investing in conveying the drug in to market is really less compared to the branded drug. As generic drugs are as safe and effectual as the branded drug and comparatively cheaper than the branded drug, patients prefer them. This leads to a autumn in the branded drug market which finally leads to a autumn in its monetary value because, market conditions such as, figure of Sellerss, barriers to entry etc. find the degree of competition in a market. Some companies try to avoid this by assorted methods.

One of such methods is “ Evergreening of patent ” .


There is a long standing argument on whether generic drugs are as effectual and safe as the branded drug. A trade name name drug is a medical specialty that is discovered, developed, and marketed by a pharmaceutical company and is protected by a patent.

A generic drug is said to be a bioequivalent of the branded drug and does non hold a patent by it self and is manufactured and marketed merely after the termination of the branded drugs patent. Brand name drugs are good known and trusted but are expensive. Generic drugs are less expensive than the trade name name drugs but drugs are non ever trusted by the people. How of all time, the concluding determination to take a trade name name drug or a generic drug involves both the patient and the wellness attention squad.Harmonizing to Howland ( 2010 ) , “ The construct of bioequivalence is used by the U.S.

Food and Drug Administration, ( FDA ) to measure and O.K. generic drugs without extra safety and efficaciousness surveies ” . As per FDA, generic drugs should hold the same active ingredient, dose strength, path of disposal and should be the same dose signifier as that of the trade name name drug even though they have different inactive ingredients and look different from the branded 1. All generic drugs are tested for safety, efficaciousness and bioequivalence with the trade name name drug before they are approved by the FDA and marketed. But the branded drug is of higher cost than generic drugs.

Most people do non recognize that, when they buy a branded medicine, they are non merely purchasing that drug but they are besides paying for what it took to develop that drug and admiration, “ why branded drugs are so expensive than the generic drugs? ” The higher cost of the branded drug is due to the big investing in research and development by the company and generic drugs does non necessitate this investing and hence they are so cheaper.

Branded and Generic drugs:

It takes about 10-15 old ages to detect a drug, develop it and do it available in the market for handling the patients. The mean cost of this full procedure is estimated to be $ 800 million to $ 1 billion. This includes the cost of 1000s of failures. For every 5,000 to 10,000 compounds, that enter the research and development, merely one receives blessing. Once the drug is approved by the FDA, the pharmaceutical company can use for a patent. A patent provides the company, the right to except others from doing, utilizing, merchandising, or importing the patented innovation.

In the US, patent provides a protection of 20 old ages, but it is applied from before the beginning of clinical tests. So the effectual life of a drug patent could be between 7-12 old ages. Once a patent is obtained, the pharmaceutical company enjoys a period of market exclusivity or monopoly, during which the company is able to put the monetary value of the drug so as to maximise profitableness. This high monetary value can assist the drug company to do a important net income on their investing in research and development. Generic drugs can non be produced lawfully until the patent has expired or the generic company certifies that the trade name companies patent is invalid or in states where the patent is non in force. Once the patent of the branded drug has expired, any pharmaceutical company can fabricate and sell that drug and hence generic drugs come in to play, which prevent the branded drug company from ordering the overall market monetary value of the drug. A generic drug must incorporate the same active ingredient as the original preparation. With the entry of generic drugs into the market, there will be a important autumn in the monetary value of the branded drug which is due to the lower monetary value of generic drugs.

Generic drugs save the patients and the insurance companies significant costs.

Are generic drugs as safe and effectual as branded drugs?

Harmonizing to the U.S. Food and Drug Administration ( FDA ) , “ generic drugs are indistinguishable or with in an acceptable bioequivalent scope to the branded drug with regard to pharmacokinetic and pharmacodynamic belongingss. ” Two drugs are said to be bioequivalent, if their rate and extent of handiness after disposal are similar to the extent that their safety and efficaciousness can be expected to be same. This implies that the generic drugs are indistinguishable by dosage, strength, path of disposal, safety, efficaciousness, intended usage and they have the same active ingredient.

Law requires the generic drug makers to turn out the bioequivalence of their drug with the branded drug and the scope of bioequivalence should be between 80 % -125 % of that of the branded drug. Bioequivalence does non needfully intend that the generic drug should be pharmaceutically tantamount to the branded drug and some chemical differences may be. Harmonizing to the Hatch-Waxman Act, an applier should register an Abbreviated New Drug Application ( ANDA ) with the Food and Drug Administration and show the bioequivalence of his generic drug with the branded drug in order to acquire an blessing. FDA, approves the drug, if it feels that the generic drug is bioequivalent with the innovator drug. Hence all the marketed generic drugs are bioequivalent with the branded drug and are hence safe and effectual as the branded drug. But in some instances, generic drugs may demo some unwanted effects which are non seen with the branded drug. For illustration, in 2007, patients who switched from an anti-depressant branded drug, Wellbutrin XL 300mg to its generic version Budeprion XL 300mg experienced certain unwanted effects.

Why are generic drugs so cheaper than the branded drugs?

The generic drugs are really cheaper than the branded drugs. The chief ground for such low monetary value of generic medical specialties may be the competition among the drug makers when drugs are no longer protected by patents. Generic drug makers need non put a batch of money in drug find and development. They besides need non turn out the safety and efficaciousness of the drug through clinical tests as they have been already conducted by the branded drug companies.

Hence companies incur fewer costs in bring forthing the generic drugs. Media advertisement and other selling attempts by the branded drug companies besides help the generic drug companies in cut downing their investing in marketing. Many generic drugs have already been in the market for decennaries and are well-known to the patients, but frequently under their branded names. Hence all the above facts make the generic drugs much cheaper than the branded drugs.

The procedure of of all time greening the patent:

Large pharmaceutical companies frequently spend some 1000000s of dollars to protect their patent from generic competition.

When the patent is about to run out, some patent holders try to widen the patent by assorted methods. They include: taking new patents, purchasing the rivals, thwarting the rivals etc. It is non a formal construct of patent jurisprudence, but is referred as a societal thought that is utilized by the pharmaceutical patent proprietors to widen their privilege of monopoly over the extremely profitable branded drug, thereby forestalling the entry of generic drugs in to the market. Some times the branded companies may utilize some other methods like licencing a subordinate to sell generics under the original patent.

Exclusivity to generic drugs:

In specific instances, a patent exclusivity of 180 yearss is offered by the FDA to the generic drug makers in specific instances. During this period, merely one generic drug maker can fabricate the generic drug.

This exclusivity period is offered merely in instances when a generic maker argues that a patent is invalid or is non violated in the industry of a generic drug. For illustration, Simvastatin was manufactured and marketed under the trade name name Zocor by Merck & A ; Co. When this company lost its patent in 2006, Ranbaxy laboratories and Teva Pharmaceutical Industries obtained a 180 twenty-four hours patent exclusivity period for Simvastatin.


Finally it can be said that, generic drugs are of at most importance because, surveies say that, generic drug permutation of prescription drugs could salvage $ 88 billion of money spent on medical attention in United States. Even though there are certain exceeding instances, it can be said that generic drugs are as safe and effectual as the branded drug, because generic drugs are marketed merely if they are approved by the FDA to be bioequivalent to the branded drug and they are inexpensive because generic drug companies need non put a batch of money on research, development and advertisement of the drug. This makes the generic drugs more preferred and acceptable by the patients and today more than 70 % of the drugs marketed are generic drugs.


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