A generic drug works exactly the same way in the body to treat a particular medical condition as a brand name drug does. The manufacturer of a generic drug must prove this to Health Canada. A generic drug is a less expensive “copycat” brand that contains the same active ingredient as the brand name drug. The active ingredient is chemically identical to the brand name drug, and the non-medicinal ingredients, which give the drug its colour and shape, are usually the same. There are generic versions of both over-the-counter and prescription medications. Not all brand name drugs have generic counterparts—generic drug manufacturers copy the more commonly used brand name drugs.
Why do brand name drugs cost more? It can take 12 to 15 years, at an average cost of $1.3 billion, for a drug company to discover a drug, conduct research and clinical trials, and have the drug approved. (Scientists research and test up to 10,000 substances before finding one that could become an approved drug. It can take up to three years to test and make the drug in the lab, and another three years to test the drug on human cells in test tubes and on animals. Six to seven more years are spent testing the drug in clinical trials.) Manufacturers of brand name drugs have a 20-year patent, which includes this research, development and approval period, and during that time they are generally the only ones who can manufacture the drug. After the 20 years are up, other drug companies can create and sell a generic version of the medication. Prices for patented medicines are regulated by a federal government agency called the Patented Medicine Prices Review Board (PMPRB).The PMPRB tries to ensure that the manufacturers’ price isn’t excessive in part by comparing it to prices of similar drugs in Canada and other countries around the world.
When you buy a prescription drug, the prescription includes the cost of the drug plus the retail markups and professional fee (also known as the dispensing fee) that is charged by the pharmacy. The price for the dispensing fee varies.
If you’re keeping an eye on costs, you can ask if there is a generic version available when your doctor writes your prescription. You can also check with your pharmacist. The price difference can be significant: generic drugs can cost 40 per cent less than their brand name counterparts. The bottom line: both brand name and generic drugs play an important role in your health. Generic drugs offer a lower-priced alternative and keep the market competitive, while funds from brand name drugs help drug companies develop new treatments as well as improve existing ones.