A generic drug is considered identical or bioequivalent to its branded cousin. Upon patent expiry of the branded version (generally 20 years), other pharmaceutical companies jump on the opportunity to create a cheaper, generic version. As the drug is not developed from scratch, the cost of commercialisation is significantly reduced. As such, generic drugs are typically sold at a discounted price, saving consumers billions of dollars a year at retail pharmacies. An example of a branded drug would be Panadol by GlaxoSmithKline. Generic versions exist as a generic paracetamol.
In many countries, pharmaceutical companies seeking approval for generic versions of approved drugs need to demonstrate that their drug is equivalent to the branded version. Product quality and bioequivalence data are required before a generic product can be registered in Australia or listed on the Pharmaceutical Benefits Scheme (PBS).
Substantial equivalence needs to be demonstrated with:
- Active ingredients
- Strength
- Dosage form
- Route of administration
- Label
- Bioequivalence – i.e. the generic is absorbed and distributed to the part of the body in a similar manner to the branded drug
Similar to all drugs, generics must also be manufactured under strict, controlled conditions that assure product quality. Drug companies must submit an abbreviated new drug application (ANDA) for approval to market a generic product.
Regulatory agencies internationally protect consumers by ensuring that they are receiving the same benefits from a generic as they do from branded versions.