How Do Generic Medicines Compare With The Big Brands?

How Do Generic Medicines Compare With The Big Brands?

The word “generic” is derived from the Latin “genus” which means “kind” or “class”. For medicines, it was originally used to describe the active chemical ingredient of a drug, in lieu of the scientific name, which is often difficult to remember and pronounce.

Pharmacy picture from Shutterstock

Over time, this definition has broadened to include additional brands of existing medicines.

Researching, developing and bringing a medicine to market is a costly process and now exceeds $US2.6 billion. Pharmaceutical companies are given a patent period of 20 years, including time for clinical trials, where they have exclusive marketing rights to recoup their investment.

After the patent period, another company can produce the same medicine under a different brand name. These usually (but not always) less expensive brands have become known as the “generics”.


Generic medicine contains the same active ingredient in the same dose as the original brand.

As well as the name on the bottle or the box, the inactive ingredients – so-called excipients – may differ. These are needed in the manufacturing process for a variety of reasons:

  • as a filler, if the quantity of active ingredient is very small
  • as a binder to hold all the ingredients together
  • to stabilise the active ingredient so it stays effective for longer
  • to improve the absorption in the body of the active ingredient
  • to sweeten or flavour the medicine
  • to coat the tablets or capsules to make them easier to swallow.

Most companies use the same or similar excipients, such as starch, lactose, gluten, sugar, preservatives and food dyes. So the likelihood of having an adverse reaction to an excipient in one brand of a medicine more so than another is very slim.

But if you have a particular allergy or intolerance or wish to avoid certain substances for cultural or medical reasons, ask your pharmacist, or look at the ingredients listed on the consumer medicines information (CMI) leaflet that comes each prescription. CMIs are also available on the NPS Medicine Wise website.

Generic medicines may have a different colour, shape, size and taste than the original brand, but, importantly, they must meet the same standards of quality, safety and effectiveness as the original brand.


Generics are usually less expensive than the original brand simply because their manufacturers don’t have the initial costs associated with the research and development. How much less expensive will vary from product to product, and from time to time.

The government subsidises Pharmaceutical Benefits Schedule (PBS) medicines to the lowest (benchmark) price. In some cases, originator brand manufacturers have brought their prices down to that competitive benchmark level. More commonly, there is a premium on the innovator/originator brand of an average of $2 to $3.

For antibiotics, for instance, there is a difference of $3.05 between a course of Amoxil (the original) brand of amoxicillin antibiotic and that of the lowest priced generic. The difference between the antibiotic Keflex and generic cephalexin is $6.30.

For gastro-oesophageal reflux, patients pay $2.50 above the benchmark price for the premium brand, Losec.

For the oral contraceptive pill, a four-month supply of Microgynon 30 is $11.40 more than its equivalent benchmark generic product.

But there is currently no difference in cost between originator brands and generics for the widely prescribed cholesterol-lowering medicines atorvastatin (Lipitor) or rosuvastatin (Crestor), or the blood pressure medication irbesartan (Avapro).

To compete with the generics-only manufacturers, some of the research-based innovator-brand pharmaceutical companies make their own “generics” under a different brand name to be marketed at the benchmark price.

Pricing changes

The proportion of PBS prescriptions dispensed as generic medicines is now around 42 per cent by volume, but just 19 per cent in dollar value. The government wants to increase this volume to reduce the cost of the PBS.

Government subsidy of PBS medicines is based on what is known as price disclosure and weighted average pricing. This takes into account the actual cost price of the various brands (originator and generic) and the market share of each brand.

From October 2016, originator brands will be excluded from the weighted average pricing calculations. Together with the proposed regular 5% reduction in prices paid to manufacturers of medicines still under patent, net savings of $US3.7 billion are expected over five years.

The good news for consumers is that prices of many common generics, including cholesterol-lowering medicines atorvastatin and rosuvastatin, are expected to drop by 25-40 per cent from October 2016.The Conversation

John Bell is Practitioner Teacher at University of Technology, Sydney.

This article was originally published on The Conversation. Read the original article.


  • “After the patent period, another company can produce the same medicine under a different brand name.”

    “Generics are usually less expensive than the original brand simply because their manufacturers don’t have the initial costs associated with the research and development.”

    To be clear, generics can only be produced after the inventor has had their monopoly. This allows the inventor to recoup all research and development costs and then some. After this monopoly period, the brand name is more expensive ONLY because the market is willing to pay a higher price. The research and development costs have been recouped with a tidy profit.

    This is not to say that there’s anything wrong with that model. In many ways, it’s a fair system. The original comments were not clear on this point

    • It’s basically a forced agreement between the regulators and pharma companies to encourage ongoing drug development. And a necessary compromise akin to any other intellectual property.

      However, the playing field isn’t always level and some companies have successfully managed to have their patents extended. Or they subtly change the licensing (e.g. change from adult to paediatric) and then apply for a new patent. Again, each side would argue their case but I don’t like it when this sort of tactic is used to keep the money train moving.

  • For the majority of us (i.e. anyone with a Medicare number) there is no hip-pocket difference for prescribed medicines such as those used as examples above. We pay the same dispensing cost regardless – assuming the branded version is on PBS which many are.

    Where it matters is with over-the-counter or shelf medicines. For these there is a difference between generic vs brand since we’re paying the entire cost of the medicine. In most cases again there is no real difference. TGA regulations make generic manufacturers jump through the same hoops as brand producers so the generic will contain exactly the same amount of exactly the same active agent.

    Which explains why GSK/RB/etc market their analgesics based on speed of onset rather than effectiveness (and since the ACCC has pulled them up on this before).

    So tl;dr if you’re after paracetamol or ibuprofen (for example), just buy whatever is the cheapest generic. Thereafter any cash you outlay is just for hype or pretty packaging.

    • I agree with the above, but, I recently bought a generic ibuprofen and three times in a row I have thrown up within 15 minutes of taking it. So strange.

      • It is possible to have a reaction to the inactive ingredients, sounds like the generic one you used will have something in there that doesn’t agree with you.

  • “After the patent period, another company can produce the same medicine under a different brand name.”

    Anyone care to guess how long the patent period will be extended if the Trans-Pacific Partnership comes into being?

    • It basically comes down to Mickey Mouse. All patents revolving around Micky Mouse IP are always extended when they are about to run out.

  • Clearly @rickinoz, you’ve never heard of the Brand Price Premium…..
    Not all pharmacies charge these Premiums, some are nice & eat the cost themselves….but the majority don’t, and even if you have a pension card or healthcare card, you can be slugged up to $5 more if you don’t go for the generic brand.
    So yes actually, there is a hip-pocket difference for prescribed medicines for those of us with a Medicare number if we were to choose the branded versions listed in the article. Try taking more than just the occasional paracetamol or ibuprofen & you might find that out…..

Show more comments

Comments are closed.

Log in to comment on this story!