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A generic drug is a
pharmaceutical drug A medication (also called medicament, medicine, pharmaceutical drug, medicinal drug or simply drug) is a drug Uncoated tablets, consisting of about 90% acetylsalicylic acid, along with a minor amount of inert fillers and binders. Aspir ...
that contains the same chemical substance as a drug that was originally protected by chemical patents. Generic drugs are allowed for sale after the patents on the original drugs expire. Because the active chemical substance is the same, the medical profile of generics is believed to be equivalent in performance. A generic drug has the same
active pharmaceutical ingredient An active ingredient is the ingredient in a pharmaceutical drug or pesticide that is biological activity, biologically active. The similar terms active pharmaceutical ingredient (also abbreviated as API) and bulk active are also used in medicine, a ...
(API) as the original, but it may differ in some characteristics such as the manufacturing process,
formulation Formulation is a term used in various senses in various applications, both the material and the abstract or formal Formal, formality, informal or informality imply the complying with, or not complying with, some set theory, set of requirements ...
,
excipient An excipient is a substance formulated alongside the active ingredient of a medication, included for the purpose of long-term stabilization, bulking up solid formulations that contain potent active ingredients in small amounts (thus often referred ...
s, color, taste, and packaging. Although they may not be associated with a particular company, generic drugs are usually subject to government regulations in the countries in which they are dispensed. They are labeled with the name of the manufacturer and a generic non-proprietary name such as the
United States Adopted Name United States Adopted Names are unique nonproprietary names assigned to pharmaceuticals marketed in the United States. Each name is assigned by the USAN Council, which is co-sponsored by the American Medical Association (AMA), the United States Pha ...
(USAN) or
International Nonproprietary Name#REDIRECT International nonproprietary name#REDIRECT International nonproprietary name {{Redirect category shell, {{R from move {{R from other capitalization {{R unprintworthy ...
{{Redirect category shell, {{R from move {{R from other cap ...
(INN) of the drug. A generic drug must contain the same
active ingredient An active ingredient is the ingredient An ingredient is a substance that forms part of a mixture In chemistry, a mixture is a material made up of two or more different chemical substances which are not chemically combined. A mixture is the p ...
s as the original brand-name formulation. The
U.S. Food and Drug Administration The United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country in . It consists of 50 , a , five major , 326 , and some . At , it is the world's . The United ...

U.S. Food and Drug Administration
(FDA) requires generics to be identical to or within an acceptable bioequivalent range of their brand-name counterparts, with respect to
pharmacokinetic Pharmacokinetics (from Ancient Greek Ancient Greek includes the forms of the Greek language Greek ( el, label=Modern Greek Modern Greek (, , or , ''Kiní Neoellinikí Glóssa''), generally referred to by speakers simply as Greek ...

pharmacokinetic
and
pharmacodynamic Pharmacodynamics (PD) is the study of the biochemistry, biochemical and physiology, physiologic effects of drugs (especially pharmaceutical drugs). The effects can include those manifested within animals (including humans), microorganisms, or comb ...

pharmacodynamic
properties. (The FDA's use of the word "identical" is a legal interpretation, not literal.)
Biopharmaceutical A biopharmaceutical, also known as a biologic(al) medical product, or biologic, is any pharmaceutical drug product manufactured in, extracted from, or semisynthesis, semisynthesized from biology, biological sources. Different from total synthesis, ...
s, such as
monoclonal antibodies A monoclonal antibody (mAb or moAb) is an antibody An antibody (Ab), also known as an immunoglobulin (Ig), is a large, Y-shaped protein used by the immune system to identify and neutralize foreign objects such as pathogenic bacteria and Viral ...

monoclonal antibodies
, differ biologically from
small molecule Within the fields of molecular biology Molecular biology is the branch of biology that seeks to understand the molecule, molecular basis of biological activity in and between Cell (biology), cells, including biomolecule, molecular synthesis, mo ...
drugs.
Biosimilar A biosimilar is a biologic medical product (also known as biologic) highly similar to another already approved biological medicine (the 'reference medicine'). Within the European Union, biosimilars are approved according to the same standards of p ...
s have active pharmaceutical ingredients that are almost identical to the original product and are typically regulated under an extended set of rules, but they are not the same as generic drugs as the active ingredients are not the same as those of their reference products. In most cases, generic products become available after the
patent A patent is a type of intellectual property Intellectual property (IP) is a category of property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depe ...

patent
protections afforded to the drug's original developer expire. Once generic drugs enter the market, competition often leads to substantially lower prices for both the original brand-name product and its generic equivalents. In most countries, patents give 20 years of protection. However, many countries and regions, such as the
European Union The European Union (EU) is a political and economic union of member states that are located primarily in Europe Europe is a which is also recognised as part of , located entirely in the and mostly in the . It comprises the wester ...

European Union
and the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
, may grant up to five years of additional protection ("patent term restoration") if manufacturers meet specific goals, such as conducting
clinical trial Clinical trials are experiments or observations done in . Such prospective biomedical or behavioral research studies on are designed to answer specific questions about biomedical or behavioral interventions, including new treatments (such as no ...

clinical trial
s for
pediatric Pediatrics ( also spelled paediatrics or pædiatrics) is the branch of medicine Medicine is the Art (skill), art, science, and Praxis (process) , practice of caring for a patient and managing the diagnosis, prognosis, Preventive medicine, pre ...

pediatric
patients. Manufacturers, wholesalers, insurers, and drugstores can all increase prices at various stages of production and distribution. In 2014, according to an analysis by the Generic Pharmaceutical Association, generic drugs accounted for 88 percent of the 4.3 billion prescriptions filled in the United States. "Branded generics" on the other hand are defined by the
FDA The United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It consists of 50 U.S. state, states, a Wash ...
and
National Health Service The National Health Service (NHS) is the umbrella term for the publicly funded healthcare systems of the United Kingdom (UK). Since 1948, they have been funded out of general taxation. There are three systems which are referred to using the " ...
as "products that are (a) either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or (b) a molecule copy of an off-patent product with a trade name." Since the company making branded generics can spend little on
research and development Research and development (R&D, R+D), known in Europe Europe is a continent A continent is any of several large landmasses. Generally identified by convention (norm), convention rather than any strict criteria, up to seven geogra ...
, it is able to spend on marketing alone, thus earning higher profits and driving costs down. For example, the largest revenues of
Ranbaxy Ranbaxy Laboratories Limited was an Indian multinational pharmaceutical company that was incorporated in India in 1961 and remained an entity until 2014. The company went public in 1973. Ownership of Ranbaxy changed twice over the course of its ...
, now owned by
Sun Pharma Sun Pharmaceutical Industries Limited (d/b/a A trade name, trading name, or business name is a pseudonym used by companies that do not operate under their registered company name. The term for this type of alternative name is a "fictitious" bu ...
, came from branded generics.


Nomenclature

Generic drug names are constructed using standardized
affix In linguistics Linguistics is the scientific study of language, meaning that it is a comprehensive, systematic, objective, and precise study of language. Linguistics encompasses the analysis of every aspect of language, as well as the met ...
es that distinguish drugs between and within classes and suggest their action.


Economics

When a pharmaceutical company first markets a drug, it is usually under a patent that, until it expires, the company can use to exclude competitors by suing them for
patent infringement A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of years in exchange for publishing an sufficiency of disclosure, enabling discl ...
. Pharmaceutical companies that develop new drugs generally only invest in drug candidates with strong patent protection as a strategy to recoup their costs of
drug development Drug development is the process of bringing a new pharmaceutical drug A medication (also called medicament, medicine, pharmaceutical drug, medicinal drug or simply drug) is a drug used to medical diagnosis, diagnose, cure, therapy, treat ...
(including the costs of the drug candidates that fail) and to make a profit. The average cost to a brand-name company of discovering, testing, and obtaining regulatory approval for a new drug, with a
new chemical entity A new chemical entity (NCE) is, according to the U.S. Food and Drug Administration The United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country in . It con ...
, was estimated to be as much as US$800 million in 2003 and US$2.6
billion A billion is a number with two distinct definitions: *1,000,000,000 1,000,000,000 (one billion A billion is a number with two distinct definitions: *1,000,000,000 1,000,000,000 (one billion, short scale; one thousand million or milliar ...

billion
in 2014. Drug companies that bring new products have several
product line extension A product line extension is the use of an established product brand name for a new item in the same product category. Line extensions occur when a company introduces additional items in the same product category under the same brand name such as ...
strategies they use to extend their exclusivity, some of which are seen as gaming the system and labeled "
evergreening Evergreening is any of various legal, business and technological strategies by which producers extend the lifetime of their patent A patent is a type of intellectual property Intellectual property (IP) is a category of property Propert ...
" by critics, but at some point there is no patent protection available. For as long as a drug patent lasts, a brand-name company enjoys a period of market exclusivity, or
monopoly A monopoly (from Greek#REDIRECT Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ), officially the Hellenic Republic, is a country located in Southeast Europe. Its population is approxi ...

monopoly
, in which the company is able to set the price of the drug at a level that maximizes profit. This profit often greatly exceeds the development and production costs of the drug, allowing the company to offset the cost of research and development of other drugs that are not profitable or do not pass clinical trials. The impact of loss of patent exclusivity on pharmaceutical products varies significantly across different product classes (e.g., biologics vs. small molecules), largely due to regulatory, legal and manufacturing hurdles associated with such products. Indeed, the greater degree of 'brand-brand' competitive dynamics seen in the biologics and complex generics space allows manufacturers of originators to better protect market share following loss of patent exclusivity. Large pharmaceutical companies often spend millions protecting their patents from generic competition. Apart from litigation, they may reformulate a drug or license a subsidiary (or another company) to sell generics under the original patent. Generics sold under license from the patent holder are known as authorized generics. Generic drugs are usually sold for significantly lower prices than their branded equivalents and at lower
profit margin Profit margin, net margin, net profit margin or net profit ratio is a measure of profitability An economic profit is the difference between the revenue a has received from its outputs and the s of its inputs. Unlike an , an economic profit ta ...
s. One reason for this is that competition increases among producers when a drug is no longer protected by patents. Generic companies incur fewer costs in creating generic drugs—only the cost of manufacturing, without the costs of
drug discovery In the fields of medicine, biotechnology Biotechnology is a broad area of biology, involving the use of living systems and organisms to develop or make products. Depending on the tools and applications, it often overlaps with related scientif ...
and
drug development Drug development is the process of bringing a new pharmaceutical drug A medication (also called medicament, medicine, pharmaceutical drug, medicinal drug or simply drug) is a drug used to medical diagnosis, diagnose, cure, therapy, treat ...
—and are therefore able to maintain
profitability An economic profit is the difference between the revenue a commercial entity has received from its outputs and the opportunity cost In microeconomic theory Microeconomics (from Greek prefix ''mikro-'' meaning "small" + ''economics'') ...
at a lower price. The prices are often low enough for users in less-prosperous countries to afford them. For example, Thailand has imported millions of doses of a generic version of the blood-thinning drug
Plavix Clopidogrel, sold under the brand name Plavix among others, is an antiplatelet drug, antiplatelet medication used to reduce the risk of Cardiovascular disease, heart disease and stroke in those at high risk. It is also used together with aspiri ...
(used to help prevent heart attacks) from India, the leading manufacturer of generic drugs, at a cost of US$0.03 per dose. Generic drug companies may also receive the benefit of the previous marketing efforts of the brand-name company, including advertising, presentations by drug representatives, and distribution of free samples. Many drugs introduced by generic manufacturers have already been on the market for a decade or more and may already be well known to patients and providers, although often under their branded name. India is a leading country in the world's generic drugs market, exporting US$20.0 billion worth of drugs in the 2019–20 (April–March) year. India exports generic drugs to the United States and the European Union. In the United Kingdom, generic drug pricing is controlled by the government's reimbursement rate. The price paid by pharmacists and doctors is determined mainly by the number of license holders, the sales value of the original brand, and the ease of manufacture. A typical price decay graph will show a "scalloped" curve, which usually starts at the brand-name price on the day of generic launch and then falls as competition intensifies. After some years, the graph typically flattens out at approximately 20% of the original brand price. In about 20% of cases, the price "bounces": Some license holders withdraw from the market when the selling price dips below their cost of goods, and the price then rises for a while until the license holders re-enter the market with new stock. The NHS spent about £4.3 billion on generic medicines in 2016–17. In 2012, 84 percent of prescriptions in the US were filled with generic drugs, and in 2014, the use of generic drugs in the United States led to US$254 billion in health care savings. In the mid 2010s the generics industry began transitioning to the end of an era of giant
patent cliff The term patent cliff refers to the phenomenon of patent A patent is a type of intellectual property Intellectual property (IP) is a category of property Property is a system of rights that gives people legal control of valuable things, ...
s in the pharmaceutical industry; patented drugs with sales of around US$28 billion were set to come off patent in 2018, but in 2019 only about US$10 billion in revenue was set to open for competition, and less the next year. Companies in the industry have responded with consolidation or turning to try to generate new drugs.


Regulation

Most developed nations require generic drug manufacturers to prove that their formulations are bioequivalent to their brand-name counterparts.EudraLex – The Rules Governing Medicinal Products in the European Union
EudraLex. Accessed 2008-06-15 Bioequivalence does not mean generic drugs must be exactly the same as the brand-name product ("pharmaceutical equivalent"). Chemical differences may exist; a different Salt (chemistry), salt or ester may be used, for instance. Different inactive ingredients means that the generic may look different from the originator brand. However, the therapeutic effect of the drug must be the same ("pharmaceutical alternative"). Most small molecule drugs are accepted as bioequivalent if their pharmacokinetic parameters of Area under the curve (pharmacokinetics), area under the curve (AUC) and Cmax (pharmacology), maximum concentration (Cmax) are within a 90% confidence interval of 80–125%; most approved generics in the US are well within this limit. For more complex products—such as inhalers, Transdermal patch, patch delivery systems, Liposome, liposomal preparations, or biosimilar drugs—demonstrating pharmacodynamic or clinical equivalence is more challenging.


United States

Enacted in 1984, the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch–Waxman Act, standardized procedures for recognition of generic drugs. In 2007, the FDA launched the Generic Initiative for Value and Efficiency (GIVE): an effort to modernize and streamline the generic drug approval process, and to increase the number and variety of generic products available. Before a company can market a generic drug, it needs to file an Abbreviated New Drug Application (ANDA) with the Food and Drug Administration, seeking to demonstrate therapeutic equivalence to a previously approved "reference-listed drug" and proving that it can manufacture the drug safely and consistently. For an ANDA to be approved, the FDA requires that the 90% confidence interval of the geometric mean test/reference ratios for the total drug exposure (represented by the area under the curve or AUC) and the maximum plasma concentration (Cmax) should fall within limits of 80–125%. (This range is part of a statistical calculation, and does not mean that generic drugs are allowed to differ from their brand-name counterparts by up to 25 percent.) The FDA evaluated 2,070 studies conducted between 1996 and 2007 that compared the absorption of brand-name and generic drugs into a person's body. The average difference in absorption between the generic and the brand-name drug was 3.5 percent, comparable to the difference between two batches of a brand-name drug. Non-innovator versions of biologic drugs, or biosimilars, require clinical trials for immunogenicity in addition to tests establishing bioequivalency. These products cannot be entirely identical because of batch-to-batch variability and their biological nature, and they are subject to extra rules. When an application is approved, the FDA adds the generic drug to its Approved Drug Products with Therapeutic Equivalence Evaluations list and annotates the list to show the equivalence between the reference-listed drug and the generic. The FDA also recognizes drugs that use the same ingredients with different bioavailability and divides them into therapeutic equivalence groups. For example, as of 2006, diltiazem, diltiazem hydrochloride had four equivalence groups, all using the same active ingredient, but considered equivalent only within each group. In order to start selling a drug promptly after the patent on innovator drug expires, a generic company has to file its ANDA well before the patent expires. This puts the generic company at risk of being sued for patent infringement, since the act of filing the ANDA is considered "constructive infringement" of the patent. In order to incentivize generic companies to take that risk the Hatch-Waxman act granted a 180-day administrative exclusivity period to generic drug manufacturers who are the first to file an ANDA. When faced with patent litigation from the drug innovator or patent holder, generic companies will often counter-sue, challenging the validity of the patent. Like any litigation between private parties, the innovator and generic companies may choose to settle the litigation. Some of these settlement agreements have been struck down by courts when they took the form of reverse payment patent settlement agreements, in which the generic company basically accepts a payment to drop the litigation, delaying the introduction of the generic product and frustrating the purpose of the Hatch–Waxman Act. Innovator companies sometimes try to maintain some of the revenue from their drug after patents expire by allowing another company to sell an authorized generic; a 2011 FTC report found that consumers benefitted from lower costs when an authorized generic was introduced during the 180 day exclusivity period, as it created competition. Innovator companies may also present arguments to the FDA that the ANDA should not be accepted by filing an FDA citizen petition. The right of individuals or organizations to petition the federal government is guaranteed by the First Amendment to the United States Constitution. For this reason, the FDA has promulgated regulations that provide, among other things, that at any time, any "interested person" can request that the FDA "issue, amend, or revoke a regulation or order," and set forth a procedure for doing so.


Acceptance

Some generic drugs are viewed with suspicion by doctors. For example, warfarin (Coumadin) has a narrow Therapeutic index, therapeutic window and requires frequent blood tests to make sure patients do not have a subtherapeutic or a toxic level. A study performed in Ontario showed that replacing Coumadin with generic warfarin was safe, but many physicians are not comfortable with their patients taking branded generic equivalents. In some countries (for example, Australia) where a drug is prescribed under more than one brand name, doctors may choose not to allow pharmacists to substitute a brand different from the one prescribed unless the consumer requests it.


Fraud

A series of scandals around the approval of generic drugs in the late 1980s shook public confidence in generic drugs; there were several instances in which companies obtained bioequivalence data fraudulently, by using the branded drug in their tests instead of their own product, and a congressional investigation found corruption at the FDA, where employees were accepting bribes to approve some generic companies' applications and delaying or denying others. In 2007, North Carolina Public Radio's ''The People's Pharmacy'' began reporting on consumers' complaints that generic versions of bupropion (Wellbutrin) were yielding unexpected effects. Subsequently, Impax Laboratories's 300 mg extended-release tablets, marketed by Teva Pharmaceutical Industries, were withdrawn from the US market after the FDA determined in 2012 that they were not bioequivalent. Problems with the quality of generic drugs – especially those produced outside the United States – are widespread as of 2019. The FDA does infrequent – less than annual – inspections of production sites outside the United States. The FDA normally gives advance notice of inspections, which can lead to cover-ups of problems before inspectors arrive; inspections performed with little or no advance notice have produced evidence of serious problems at a majority of generic drug manufacturing sites in India and China.


Litigation

Two women, each claiming to have suffered severe medical complications from a generic version of metoclopramide, lost their Supreme Court appeal on June 23, 2011. In a 5–4 ruling in ''PLIVA, Inc. v. Mensing'', the court held that generic companies cannot be held liable for information, or the lack of information, on the originator's label.Steven Casey for Law360. October 24, 201
Generic Pharmaceutical Liability: Challenges And Changes
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India

The Government of India, Indian government began encouraging more drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970. The Patents Act removed composition patents for foods and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The resulting lack of patent protection created a niche in both the Indian and global markets that Indian companies filled by reverse-engineering new processes for manufacturing low-cost drugs. The code of ethics issued by the Medical Council of India in 2002 calls for physicians to prescribe drugs by their generic names only. India is a leading country in the world's generic drugs market, with
Sun Pharma Sun Pharmaceutical Industries Limited (d/b/a A trade name, trading name, or business name is a pseudonym used by companies that do not operate under their registered company name. The term for this type of alternative name is a "fictitious" bu ...
ceuticals being the largest pharmaceutical company in India. Indian generics companies exported US$17.3 billion worth of drugs in the 2017–18 (April–March) year. In 1945–2017, bioequivalence studies were only required for generics of drugs that are less than four years old. Since 2017, all generic drugs of certain classes, irrespective of age, require bioequivalence to be approved.


China

Generic drug production is a large part of the pharmaceutical industry in China. Western observers have said that China lacks administrative protection for patents. However, entry to the World Trade Organization has brought a stronger patent system. China remains the largest exporter of
active pharmaceutical ingredient An active ingredient is the ingredient in a pharmaceutical drug or pesticide that is biological activity, biologically active. The similar terms active pharmaceutical ingredient (also abbreviated as API) and bulk active are also used in medicine, a ...
s, accounting for 40% of the world market per an 2017 estimate. Bioequivalence studies are required for new generic drugs starting from 2016, with older drugs planned as well. In addition, ''in vitro'' dissolution behavior is required to match. Since 2018, 44 classes of drugs are exempt from testing (requiring only a dissolution check), and 13 classes only require simplified testing.


Industry

As of 2019, several major companies traditionally dominate the generic drugs market, including Teva Pharmaceutical Industries, Teva, Mylan, Novartis' Sandoz, Amneal Pharmaceuticals, Amneal and Endo International. Prices in traditional generic drugs have declined and newer companies such as India-based Sun Pharmaceutical, Sun Pharma, Aurobindo Pharma, and Dr. Reddy's Laboratories, as well as Canada-based Apotex, have taken market share, which has led to a focus on biosimilars.


See also

* Anti-Counterfeiting Trade Agreement#Criminalising generic medicine (ACTA) * Bayh–Dole Act * Generic brand * Generic pharmaceutical price decay * International Nonproprietary Name * Inverse benefit law * Me-too compound * Prescription costs * Research exemption * SOPA#Protection against counterfeit drugs * Transatlantic Trade and Investment Partnership


References


Further reading

*


External links


United States Adopted Names Program, generic drug naming process, lists of adopted names

USFDA, Office of Generic Drugs
*
UK Department of Health, generic drugs

The Medical Letter on Drugs and Therapeutics

''GPhA'' Generic Pharmaceutical Association


{{DEFAULTSORT:Generic Drug Pharmaceutical industry Pharmaceuticals policy Public domain Life sciences industry