Drug Patents And Generic Alternatives Generic Drugs Economics Essay

In the health care crisis, drug monetary values are increasing drastically as more advanced drugs are being created. From persons who are hit hard by this crisis to wellness attention suppliers, concerns and big pharmaceutical companies, all are affect the generic-brand name contention. Generic drugs are a new option to these drugs without the sky rocketed monetary values that monopolistic trade name named pharmaceutical companies are puting. Consumers are stuck in between the two, holding to take between their wellness attention supplier and the pharmaceutical companies. Since generic drugs are more popular among consumers, many have questioned whether or non it is safe because of the low costs. Can there really be a two manner solution-having generic drugs that are both low cost and merely every bit effectual as the generic drug? Well, there are two sides of the narrative and consumers want to cognize about it. Myths frequently hide the truth behind the drug companies and the ordinance that follows with the uninterrupted production of new drugs.

Generic Drugs: What are generic drugs?

Generic Drugs are transcripts of brand-name drugs without the high costs. Generic companies are able to take advantage of these inventions and make transcripts of trade name name drugs. They do non necessitate the initial research to make discover the drug ; hence, leting it to be sold at a much lower cost. Generic drugs are available non merely as prescriptions, but over the counter ( OTC ) every bit good. This means that anyone can buy it. These drugs, on the other manus, can merely be produced and sold after the original drug is out of patent. Although these are merely “ transcripts, ” they contain the same active ingredients as any other trade name name drug.

One ground why generic drugs are of import is that it makes healthcare more low-cost, brings consumers important nest eggs. However, the FDA, who regulates these drugs before distribution to the consumers, is doing important alterations to leting people to be able to obtain these drugs. They are rushing up its procedures and engaging more experts to prove the quality of these drugs. However, with low costs, people are disquieted about the quality of these drugs ( Meadows, pg 2 ) . Regulation of the generic drugs is merely every bit of import as trade name name drugs. The FDA is serious about seting the word out about generic drugs by advancing consciousness of non merely of its inexpensive monetary values, but of its effectivity and quality, every bit good.

While these generic drugs seem to be more good, the trade name name drugs should non be pushed aside. Generics are “ merely possible with the creative activity of new and advanced drugs. ” This procedure, however, costs one million millions of dollars of investings. It is estimated that the development of a new drug norms $ 897 million ( Meadows, pg 1 ) . As the FDA Consumer Magazine writes, “ Without just compensation from meaningful patent production, drug research and development would halt. ” This means that even though generics play a cardinal function in doing health care more low-cost, there is no uncertainty that brand-name drugs are merely as indispensable ( Meadows, pg1 ) .

Cost: Choosing cost over quality?

The rise in health care costs is chiefly due to the crisp additions in monetary values of prescription drugs that are posed by these big pharmaceutical companies. Paying for drugs is no longer a job for the hapless. It has started to impact even the companies who are paying for health care. Businesss are get downing to shrivel their wellness attention program for their employees. Of class, the aged is the most affect. Senior citizens, who used to trust on their wellness attention supplier and their auxiliary insurance, can no longer do that any longer. The ultimate job is that wellness attention is shriveling while the monetary values of prescription drugs continue to increase quickly. Therefore, generic drugs are a great alternate to meet these jobs. Peoples like senior citizens and those who are hapless are more likely to buy generics instead than trade name name drugs during this clip of health care crisis ( Angell, pg 13 ) . For one thing, trade name name drugs are increasing in monetary values and many insurance companies do n’t cover it. They will, alternatively, supply the generic option of a drug to a patient if it ‘s available due to the low costs, unless otherwise specified by the doctor.

Prescription drugs require one million millions in investing in order for it to be made and sent out to the populace. What sets generic drugs apart from the trade name name drugs is chiefly the cost. Generic drugs can be 30 to 70 per centum cheaper than its trade name name face-to-face ; sometimes even 85 % cheaper ( FDA, 2010 ) . Harmonizing to Chart 1, a patient who has tummy ulcers will necessitate to pay about $ 164.27 for a month supply of the drug called Prevacid, which is the trade name named version, while on the other manus, paying $ 25 for the generic version called ameprozole. ( Blue Shield, 2008 ) . Generic drugs have become more popular among American consumers within this past 20 old ages. In 1984, less than 19 % of all drugs were generics. But today, more than 54 % of drugs that are prescribed are generics ( Public Citizens, 2010 ) .

These cost effectual drugs are inquiry because consumers do n’t see a ground how a drug can be the same but a batch cheaper as good. Harmonizing to the FDA, the low costs of these drugs are because of the low investing in research and development. While trade name name companies put one million millions into investing, generic companies truly do n’t hold to put in this. The high monetary values are non chiefly due to high costs of research but besides to selling. Every twenty-four hours, Americans are faced with hoardings and ads about these new advanced drugs and how they are utile and of import. Part of what consumers are paying for when they are purchasing the drug covers these monolithic advertizements by the pharmaceutical companies.

Regulation: What is the function of the FDA?

The quality of the drugs does non depend entirely on the generic or branded maker but besides relies on the ordinance of the U.S. Food and Drug Administration. While companies care for net income, the FDA is a authorities organisation that has a end to protect the lives of consumers. Its proving on the safety of new drugs is truly of import and needs to be done before any danger can be imposed on patients. The FDA, represented by Gottllieb, explains in the address that no sides are being taken to either halting pharmaceutical companies or doing consumers pay more ( Gottlieb, 2010 ) . For each drug, they verify that no side effects or any possible hazards to drugs being released to the populace. At the terminal, the FDA strongly encourages the usage of generic drugs because they have tested and believe that it will be merely as effectual while being cost effectual. It besides encourages trade name name companies because go oning of invention and the entree of new drugs by consumers is of much importance.

Regulation of drugs by the FDA is rigorous. Harmonizing to the US Food and Drug Administration ( FDA ) , “ To derive FDA blessing, a generic drug must:

incorporate the same active ingredients as the pioneer drug ( inactive ingredients may change )

be indistinguishable in strength, dose signifier, and path of disposal

have the same usage indicants

be bioequivalent which means it delivers the same sum of ingredients into the blood stream

natural stuff must run into the same demands for individuality, strength, pureness, and quality set by the U.S. Pharmacopoeia

be manufactured under the same rigorous criterions of FDA ‘s good fabrication pattern ordinances required for pioneer merchandises ”

One inquiry about generic drugs is its ordinance by the FDA as compared to the trade name name drug or the reference drug. Does generic intend lower cost and lower safety? A few instances of studies have been made on generic drugs stating that it has possible hazards. In 2008, it was reported that a drug called Digitek, a generic of gidoxin, were being produced outsize tablets. Actavis, the company bring forthing the generic, realized that there were about 20 outsize tablets in a batch of about 5 million ( FDA, 2010 ) . This caused a batch of oppugning of the ordinance by the FDA. Although they reacted sharply, it is believed that ordinance of these generic drugs by the FDA is a batch easier for generic than for trade name name drugs. These initial drugs that are foremost tested are placed under greater limitations than generic drugs. The trade name name drugs have to go through many trials, including clinical surveies. It can be safely assumed that trade name name drugs are safer even though its costs are higher. Harmonizing to Meadows, under the Drug Price Competition and Patent Term Restoration Act of 1984, which is besides known as the Hatch-Waxman Act, generic companies do n’t hold to reiterate expensive clinical tests on the generic drugs ( Meadow, pg 3 ) . There is one defect and it is that these drugs do non hold to go through clinical trials. Therefore it can be safely assumed that “ what is chemically tantamount does non intend it is clinically tantamount ” ( Road Back Foundation, 2010 ) .

Bioequivalence: How does this work?

The issue of bioequivalence is a cardinal facet of this generic-brand name argument. Generic drugs are cost efficient ; nevertheless, the effectivity of these drugs is questioned. Harmonizing to the FDA, “ Generic drugs are required to hold the same active ingredient, strength, dose signifier, and path of disposal as the trade name name ( or mention ) product.A Generic drugs do non necessitate to incorporate the same inactive ingredients as the trade name merchandise. These active ingredients will find whether the drug is chemically similar to the original patented or trade name name drug. However, the quality of these ingredients is besides of import. Based on what the Road Back Foundation writes, the ingredients used in the drug production are non of good quality. These ingredients that used to be taken from Western Europe are non being taken from China, Japan, South Korean and Eastern Europe ( Road Back Foundation ) . These fluctuations finally affect the drugs and the FDA accepts that. This is a large difference in the public presentation of a drug.

The FDA besides states that the generic drug that is modeled after the trade name name one must execute “ about ” the same manner as the trade name name drug. But what does about intend? Well, the FDA allows a bioequivalence scope of plus or minus 20 % of the original drug, intending that it can hold a sum of 40 % difference. Such large difference can impact how the optical density of the drug in a individual. It can besides be non as effectual or even harmful in worse instances. However, the FDA lone reinsures that the drug is executing the same manner as the mention merchandise with the allowance of little fluctuations ( FDA ) . Variations are ever possible ; they can even happen in mass production of a drug and can be a spot different from bundle to box.

Monopoly: Does patents give them command?

The FDA regulates drugs and the allowance of a certain drug to be distributed into the market. Drug patents are of import to drug companies, leting patenting the drug itself, the methods of its usage, the preparation or the procedure of doing it. Patents can halt any other company from doing to selling the drug without the pioneer company ‘s permission. At the same clip, the trade name name companies will contend to maintain this drug to themselves because they do non desire generic companies to sell the same drug at a cheaper monetary value. Generic drugs, finally, causes beads in gross revenues of the drug by the trade name name companies ; hence, kicking them out of the game. As a consequence of this large industry, trade name name companies still want to take control of this by utilizing the jurisprudence to squash their manner through. Large drug companies know how to play the game and they will make everything they can to halt generic companies.

Pharmaceutical companies can be compared to monopolies. They can command the monetary values of the drugs that they develop. These companies spent one million millions on innovations of new drugs, ensuing in them with the allowance of holding patents on their drug. Whenever a company makes a new drug, they are allowed to set a patent on them. A patent on a drug normally lasts for 20 old ages and they are able to do as much money as they want on it since they are able to command the monetary values. This is how pharmaceutical companies make money on trade name name drugs. However, what happens after 20 old ages? Drugs need to go through many ordinances, whether or non they are new drugs or imitations of patented drugs. If generic drugs are being made, there is no uncertainty that the gross revenues of the trade name name drugs will drop while the gross revenues of the generic option will increase.

The Pharmaceutical industry is really competitory and companies are willing to make whatever they can to hold or even halt generics from being in the market. In this industry, the lone thing that protects the drugs from other rivals is patents ( Baker, pg 1 ) . Different industries have different patenting effects. Such drugs require million of investing in the innovation of it while dearly-won really small in doing imitations by generic companies. Generic companies normally apply for the production of a generic drug at the FDA right when patents are about to run out and this brings great injury to the patent holder. Such companies will frequently contend to decelerate down this procedure by making loopholes for the generic company. They may action for violation of the drug ; hence, detaining the procedure in which it can be sold. This may detain the entree of a generic drug from four month up to 44 months ( Meadows, pg 3 ) .

These pioneer companies are besides being protected by the NDA. This “ back-up ” program helps the company regain losingss by utilizing other approved drugs or by partnering with generic companies or holding subordinate companies ( Wagh, pg1 ) . On the other manus, many of these pharmaceutical companies who are doing the “ brand-name ” drugs are besides the 1s who are doing the generic drugs. Although from a point, it seems like generic drug companies are taking over the market after the patent expires from the drug, it is non truly the instance since it can be the same company seting out the generic drug, but merely in a lower monetary value. It is similar to Robert A. Hardt ‘s account that the drug makers are non merely caring about doing net income but they are besides caring about the public wellness. The continuance of research and development is what allows generic to be made ( Hardt, pg 57 ) .

It seems that there is a batch of competition between generic and pioneer companies. As one company benefits, the other 1 is at a loss ; gross revenues can skyrocket and immerse at the same clip. However, there is besides competition among generic companies themselves. Generic Drug companies can besides acquire exclusivity for a drug from each other. The exclusivity act will let any generic drug company a 180-day period to do and sell the drug while viing with other companies. ( Wagh, pg 3 ) Because of this competition, it can besides drive monetary values even lower that it is suppose to be. Harmonizing to Meadows, the Hatch-Waxman Act is really increasing competition between generic and trade name name companies. This helps maintain drug costs down and besides causes pioneer companies to develop new drugs. It is a two manner split that benefits both types of companies every bit good as consumers who are numbering on these newer, more effectual and cheaper drugs ( Meadows, pg 3 ) .

There are both disadvantages and advantages to the generic-brand name drug contention. However, the consumers should be informed about it. The FDA continues to modulate these drugs and the drugs should be merely as safe and effectual as the original-brand named drug. Pharmaceutical companies continue to modulate the high monetary values of trade name name drugs because they have to do net income from it after their investings on research and development every bit good as the selling costs of seting the drug out at that place for consumers to be informed about it. They are making new drugs that are finally assisting patients and their unwellnesss. With these new drugs, the FDA regulates and trials them before it is given to patients. However, new options like generic drugs are being promoted because it can non merely aid patients but they are besides cost-friendly, about one-third cheaper than the original trade name name drug. In the terminal, these trade name name pharmaceutical companies will go on to contend to maintain generic companies out of the market since it is impacting the gross revenues of the net income. While this is go oning, consumers should be able to acquire choice drugs along with cost effectual benefit. Generic drugs will be merely as safe and effectual as the trade name name drugs.

Chart 1: Comparison costs of generic vs. trade name name drugs ( Blue Shield, 2010 )