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Why are Generic Drugs Less Expensive?

Written By: Jim Long on September 18, 2014 No Comment

It’s true! Generic drugs are less expensive. We know that. But why is that the case?

Generic drugs are cheaper for a few reasons. The expiration of a patent will help free up competition, which will immediately lower the price.

Many different companies will produce the drug and compete to sell it. This will help to get the production and costs down as low as possible so that they can turn a profit.

The patent holders on the other side have a lot of expense that goes into making new drugs. This means that the huge profit margins are replaced in order to make this money back before the patent runs out. They do not need to lower the price of the produce because they do not have any competition due to the fact that they are the only ones allowed to make the drug.

Usually there are lower costs in making and testing the drug for manufacture of generics because of all the hard work that has been done by the original company.

They will also get many benefits from the last patent holders marketing and often times the drug is already well known by the medical profession making it so much easier to sell it. The lower price may also open up new markets that were priced out in the past.

The cheaper cost does not mean that the lower the quality in generic drugs. It just means that they are tightly regulated as name brand competitors.

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