Generic vs. brand-name drugs: Is there a difference?

HealthMarkets helps you understand the difference between these different types of prescription medications — and how that can help you save.

Next time you go to your local pharmacy, you may have some sticker shock. You’re not the only person who’s been feeling the cost of prescription drugs in their wallet lately. In 2022, the United States health care system spent more than $633.5 billion on prescription drugs. And nearly 3 in 10 American adults who take prescription drugs say they’ve skipped doses, cut pills in half or not filled prescriptions — all due to cost.

You may be able to spend less on your prescriptions by asking your doctor for generic drugs, not brand-name ones. Generic drugs are prescription drugs that have the same active ingredients as brand-name drugs but cost less.

If that sounds too good to be true, it’s not. Here are 4 facts to know about generic versus brand-name drugs.

Looking for an affordable health insurance plan to help with your prescriptions? Call a licensed insurance agent at (800) 827-9990 to discuss what’s available, or browse your options online today.

Fact #1: Generic drugs work the same way as brand-name ones.

“U.S. Food and Drug Administration (FDA)–approved generic medications work the same way as brand-name medications, since the same active ingredient is used,” explains Alexandra Watson, Pharm.D., B.C.A.C.P. She’s an associate professor at the Albany College of Pharmacy and Health Sciences in Albany, New York, and a clinical pharmacist at New York–based Community Care Physicians.

In fact, to get approved by the FDA, a generic drug needs to contain the exact same active ingredients and have the same dosage as the brand-name type. It also has to be just as safe, effective and stable as the brand-name version, notes Watson.

So, how does the FDA do that, exactly? It has a generic drugs program. They conduct preapproval reviews to make sure all those requirements are met, adds Watson. They’ll make sure that the generic medication is “bioequivalent” to the generic. That means that it has a similar chemical makeup as the brand-name version. The FDA also conducts inspections of manufacturing plants to make sure drug companies are following safety and regulation requirements.

Fact #2: Generic drugs are often cheaper.

Typically, generic drugs cost up to an estimated 80% to 85% less than brand-name drugs, according to the FDA. That’s because drugmakers don’t have to do the human and animal studies over again that were done for the brand-name version. Those studies have already shown the FDA that the drugs are safe and effective, explains Watson. “The generic medications only have to show that they are equal to the brand-name medication, which is a less costly process.”

When the FDA first approves a brand-name drug, it’s usually protected by a patent that keeps other companies from selling the medication. (A patent gives the company the legal right to keep others from making the same drug.) This can cause brand-name drugs to be more expensive. Currently, the term of a new patent is generally 20 years from the date that the application for the patent was filed in the United States. But once the patent expires, other drug companies can sell the medication. And that brings costs down, points out Watson.

Need help figuring out your plan’s prescription drug coverage? Call a licensed insurance agent at (800) 827-9990, or browse your options online today.

Fact #3: Generic drugs aren’t always the best choice.

Even though generic drugs may cost less than the brand-name versions, you may still need to go with a brand-name one. Here are a few reasons why that may be the case:

• There hasn’t been an FDA-approved generic drug released. This can occur if the brand-name drug still has a patent, notes Watson.
• You’ve tried the generic version and weren’t satisfied. This might be for a couple reasons:
  • You had an allergic reaction or unwanted side effects.
  • The drug didn’t work as well for you as the brand-name version does.

The reason that a generic drug can work differently than a brand-name equivalent is that it might have different inactive ingredients, notes Watson. These could be anything from coloring to preservatives (how long it keeps). And those differences might disagree with you.

If that’s the case, your doctor may be able to provide a letter to your insurance company requesting that they cover the brand-name drug. Keep in mind that even if your insurance company covers it, it may still be more expensive than the generic version, points out Watson. Talk to your doctor to see if there’s another generic drug you can take instead.

Fact #4: You can usually tell a generic versus a brand-name drug just by looking at it.

Trademark laws in the United States don’t allow a generic drug to look exactly like other drugs that are already on the market. Brand-name and generic drugs can also look different from one another, since drug companies can use different inactive ingredients to make them.

“Most medications have markings on them that can be used to identify what medication, dose and manufacturer it is,” says Watson.

You’ll want to keep your eye out for copycat drugs. Some companies may try to sell a generic version of a popular drug before it’s been approved. But it won’t be regulated, notes Watson. And that can make it dangerous and potentially bad for your health.

Want to know more about your plan’s prescription benefit? Call a licensed insurance agent at (800) 827-9990, or browse your options online today.