Health Insurance: Generic Drugs

Information on Generic Drugs

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Generic drugs are drugs that are comparable, and often identical to name-brand drugs. Generic drugs are similar to their name-brand counterparts in strength, form, quality, dosage, performance, and side effects.

When the patent of a brand name medication expires, a generic version of the drug can be produced and sold. Generic versions of a drug must use the same active ingredients as the brand name drug, and it must meet the same quality and safety standards.

Before approving a generic drug, the U.S. Food and Drug Administration (FDA) requires tests and procedures to assure that the generic drug can be substituted for the brand name drug.

Also Known As

Generic drugs are also commonly known as generics. The term is also sometimes used to refer to the actual physical makeup of drug, before it is associated with any brand name.


Because of the patent process, medications that have been on the market for less than 17 years do not have a generic equivalent being sold. Your doctor, however, may prescribe a similar medication to treat your condition that does have an available generic equivalent.

For example, if you are taking Lipitor (Atorvastatin), which is still on patent protection, for high cholesterol, your doctor can switch you to simvastatin, the generic version of Zocor.


Generic drugs can save you up to 80% on the cost of a prescription when compared with the brand name drug.

Most often, the savings range from 30% to 50%.

According to the National Association of Chain Drug Stores, the average retail price of a generic prescription drug in 2008 was $35.22. The average retail price of a brand name prescription drug was $137.90.

Many commonly used brand name medications have readily available generic versions.

For example:

The average retail price of 20mg Pravachol, a drug used to treat high cholesterol, is $132 for a 30-day supply. The same amount of pravastatin, the generic version of Pravachol, can be purchased at Wal-Mart, Target, and other large chain stores for $4, a savings of more than $1,500 a year.

The average retail price of 500mg Glucophage, a drug used to treat type 2 diabetes, is $204 for a 90-day supply. The same amount of metformin, the generic version of Glucophage, can be purchased at chain stores for $10, a savings of more than $750 a year.

Why Are Generic Drugs Less Expensive?

Generic drugs are generally much less expensive than their brand-name counterparts. Since generic drug companies do not have to develop a medication from scratch, it costs significantly less to bring the drug to the market. Once a generic medication is approved, several companies can produce and sell the drug. This competition helps lower prices. In addition, many generic drugs are well-established, frequently used medications that do not require expensive advertising.

More Information from Dr. Mike

·         Generic Drugs – Are They Safe and Effective?

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