The Making of a Generic Drug

By Tucker Thompson

Prescription drug patents, generally lasting 17 years, begin when a pharmaceutical company files to market a drug with the Federal Drug Administration (FDA).

Pharmaceutical companies must run medical trials to show what the medical indications are, the side effects that may occur, the drug’s half life, and how effective the drug is for the medical conditions the drug is going to be used for. The half-life of a drug indicates the average time a drug should be at its peak performance in a person’s blood.

Before a drug can get FDA approval, a pharmaceutical company spends millions of dollars performing lab studies on it; first the drug is tested on animals, followed by clinical trials with patients administered the drug’s real formulation, while other patients are administered placebos. Patients in these trials agree to not know which they will be given during the studies (called double blind studies). The paperwork, including all the lab studies and results fills, on average, two 40-foot trailers that are 6 feet high.

The cost of prescription brand-name drugs includes the money a company spent on research, scientific development, all studies and clinical trials, any added expenses to meet all FDA requirements, the manufacturing, and the continuous monitoring of a drug throughout its patent protection. Usually the drug has a patent left for about seven or eight years after FDA approval to help pharmaceutical companies recover the costs incurred to research and develop their drugs.

Once patent protection expires, generic companies can apply for FDA approval to market a generic version. Initially only one generic company is approved. While they aren’t required to prove how the drug works, the FDA does regulate the labeling and manufacturing of the generic version. A generic drug can, however, have a 20% variance in their formulation compared to the original brand-name drug. Example: a generic 100-milligram drug can have an 81- to 120-milligram variance. This is one reason why some generics work better than others and the cost of the first generic is usually close to the brand-name drug. Once the FDA approves the drug to several generic drug companies the price drops.

Tucker Thompson, CSA, has worked in the insurance field for over 23 years in Long-Term Care, Medicare Supplements. Medicare Advantage Plans, Prescription Drug Plans and Life Insurance policies.