Brand Names vs Generics - Is There a Difference?

The cost difference between a brand name drug and its generic equivalent can be hundreds of dollars. Generic drugs are equal substitutes for their brand name counterparts. The FDA conducts rigorous reviews on all generics to make sure these medications meet the same standards as the brands.

• A generic medication works in the same way and provides the same clinical benefit as its brand-name version. 
• Any generic medication modeled after a brand-name medication must perform the same in the body as the brand-name medication. 
• FDA scientists review the manufacturers’ procedures and FDA inspectors go to the generic drug manufacturer's facility to verify standards 
• Placebos labeled with a brand name can prompt as much relief for conditions such as headache andheartburn as tablets containing the actual drug 
• Direct-to-consumer advertising for drugs totals about $5 billion annually 
• When multiple generic companies market the same product, market competition typically results in prices about 85% less than the brand name. 

Drug companies must submit an Abbreviated New Drug Application (ANDA) for approval to market a generic drug. An ANDA must show that the generic is equivalent to the brand in the following ways:

• The active ingredient is the same and the inactive ingredients of the medication are FDA-Approved
• Extensive "stability tests" prove that generic versions are effective for, at minimum, the same amount of time as the brand-name, if not longer. 
• Evidence must be provided that each step of the manufacturing process will produce the same result each time.

Plan sponsors typically implement a plan design so that the member has to pay the difference between the brand cost and generic cost, even if the doctor indicates brand on the prescription. However, plan sponsors who do not, are paying significantly higher costs for members who choose the higher cost brand drug.

PBIRx has been exclusively providing intelligent solutions to clients in the management of pharmacy benefit costs since 1993. With a staff that includes IT personnel, actuaries, financial analysts, clinical pharmacists, attorneys, HIPAA Compliance Officers and many more experts, PBIRx’s mission is to create optimal health care outcomes while minimizing overall health care costs. For more information, please visit www.pbirx.com or call (888) 797-2479.