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Generic drug

A generic drug (generic drugs, short: generics) is a drug which is produced and distributed without patent protection. The generic drug may still have a patent on the formulation but not on the active ingredient.

A generic must contain the same active ingredients as the original formulation. According to the U.S. Food and Drug Administration (FDA), generic drugs are identical or bioequivalent to the brand name counterpart with respect to pharmacokinetic and pharmacodynamic properties. By extension, therefore, generics are identical in dose, strength, route of administration, safety, efficacy, and intended use . In most cases, generic products are available once the patent protections afforded to the original developer have expired. When generic products become available, the market competition often leads to substantially lower prices for both the original brand name product and the generic forms. The time it takes a generic drug to appear on the market varies. In the US, drug patents give twenty years of protection, but they are applied for before clinical trials begin, so the effective life of a drug patent tends to be between seven and twelve years.

Economics

Generic drugs can save patients and insurance companies substantial costs, supposedly without compromising the quality of care. The principal reason for the relatively low price of generic medicines is that competition increases among producers when drugs no longer are protected by patents. The price of the generic product decreases as the rate of production increases. Companies also incur fewer costs in creating the generic drug, and are therefore able to maintain profitability while offering the drug at a lower cost to consumers. The costs of these generic drugs are so low that many developing countries can easily afford them. For example Thailand is going to import millions of pills of the generic version of Plavix, a blood-thinning treatment to prevent heart attacks, at a cost of 3 US cents per pill from India, the leading manufacturer of generic drugs.

Generic manufacturers do not incur the cost of drug discovery, and instead are able to reverse-engineer known drug compounds to allow them to manufacture bioequivalent versions. Generic manufacturers also do not bear the burden of proving the safety and efficacy of the drugs through clinical trials, since these trials have already been conducted by the brand name company. (See the Approval and regulation section, below, for more information about the approval process.) It has been estimated that the average cost to brand-name drug companies of discovering and testing a new innovative drug (with a new chemical entity) may be as much as $800 million.

Generic drug companies may also receive the benefit of the previous marketing efforts of the brand-name drug company, including media advertising, presentations by drug representatives, and distribution of free samples. Many of the drugs introduced by generic manufacturers have already been on the market for a decade or more, and may already be well-known to patients and providers (although often under their branded name).

Prior to the expiration of a drug patent, a brand name company enjoys a period of “market exclusivity” or monopoly, in which the company is able to set the price of the drug at the level which maximizes profitability. This price often greatly exceeds the production costs of the drug, which can enable the drug company to make a significant profit on their investment in research and development. Thus enabling them to fund the research and development of new medicines which most generic companies cannot afford to do. The advantage of generic drugs to consumers comes in the introduction of competition, which prevents any single company from dictating the overall market price of the drug. Competition is also seen between generic and name-brand drugs with similar therapeutic uses when physicians or health plans adopt policies of preferentially prescribing generic drugs as in step therapy. With multiple firms producing the generic version of a drug the profit-maximizing price generally falls to the ongoing cost of producing the drug, which is usually much lower than the monopoly price .

The FDA gives a list of 10 non-proprietery drug names (non IUPAC) for the developing drug company to choose from and 10 brand names for the company to choose from.^{Citation Needed.} It is in the best interest of the company to choose a brand name that is easy to remember and a non-propietery drug name which is difficult to remember. (eg. 7-chloro-1-methyl-5-phenyl-1,3-dihydro-2H-1,4-benzodiazepin-2-one has a brand name of Valium, and a non-proprietery name of diazepam)

Patent issues

When can a generic drug be produced?

When a pharmaceutical company first markets a drug, it is usually under a patent that allows only the pharmaceutical company that developed the drug to sell it. Generic drugs can be legally produced for drugs where: 1) the patent has expired, 2) the generic company certifies the brand company's patents are either invalid, unenforceable or will not be infringed, 3) for drugs which have never held patents, or 4) in countries where a patent(s) is/are not in force. The expiration of a patent removes the monopoly of the patent holder on drug sales licensing. Patent lifetime differs from country to country, and typically there is no way to renew a patent after it expires. A new version of the drug with significant changes to the compound could be patented, but this requires new clinical trials. In addition, a patent on a changed compound does not prevent sales of the generic versions of the original drug unless regulators take the original drug off the market.

This allows the company to recoup the cost of developing that particular drug. After the patent on a drug expires, any pharmaceutical company can manufacture and sell that drug. Since the drug has already been tested and approved, the cost of simply manufacturing the drug will be a fraction of the original cost of testing and developing that particular drug.

Challenging patents

Brand-name drug companies have used a number of strategies to extend the period of market exclusivity on their drugs, and prevent generic competition. This may involve aggressive litigation to preserve or extend patent protection on their medicines, a process referred to by critics as “evergreening”. Patents are typically issued on novel pharmacological compounds quite early in the drug development process, at which time the ‘clock’ to patent expiration begins ticking. Later in the process, drug companies may seek new patents on the production of specific forms of these compounds, such as single enantiomers of drugs which can exist in both “left-handed” and “right-handed” forms, different inactive components in a drug salt, or a specific hydrate form of the drug salt. If granted, these patents ‘reset the clock’ on patent expiration. These sorts of patents may later be targeted for invalidation (“paragraph IV certification”) by generic drug manufacturers.

Generic drug exclusivity

The U.S. Food and Drug Administration offers a 180 day exclusivity period to generic drug manufacturers in specific cases. During this period only one (or sometimes a few) generic manufacturers can produce the generic version of a drug. This exclusivity period is only used when a generic manufacturer argues that a patent is invalid or is not violated in the generic production of a drug, and the period acts as a reward for the generic manufacturer who is willing to risk liability in court and the cost of patent court litigation. There is often contention around these 180 day exclusivity periods because a generic producer does not have to produce the drug during this period and can file an application first to prevent other generic producers from selling the drug.

Large pharmaceutical companies often spend thousands of dollars protecting their patents from generic competition. Apart from litigation, companies use other methods such as reformulation or licensing a subsidiary (or another company) to sell generics under the original patent. Generics sold under license from the patent holder are known as authorized generics; they are not affected by the 180 day exclusivity period as they fall under the patent holder's original drug application.

A prime example of how this works is simvastatin (Zocor), a popular drug created and manufactured by U.S. based pharmaceutical Merck & Co., which lost its US patent protection on June 23, 2006. India-based Ranbaxy Laboratories (at the 80 mg strength) and Israel-based Teva Pharmaceutical Industries (at all other strengths) received 180 day exclusivity periods for simvastatin; due to Zocor's popularity, both companies began marketing their products immediately after the patent expired. However, Dr. Reddy's Laboratories also markets an authorized generic version of simvastatin under license from Zocor's manufacturer, Merck & Co.; some packages of Dr. Reddy's simvastatin even show Merck as the actual manufacturer and have Merck's logo on the bottom.

Approval and regulation

Ensuring bioequivalence

Most nations require generic drug manufacturers to prove that their formulation exhibits bioequivalence to the innovator product. In the U.S., the FDA must approve generic drugs just as innovator drugs must be approved. The FDA requires the bioequivalence of the generic product to be between 80% and 125% of that of the innovator product. Bioequivalence, however, does not mean that generic drugs must be exactly the same (“pharmaceutical equivalent”) as their innovator product counterparts, as chemical differences may exist (different salt or ester – a “pharmaceutical alternative”).

Over the past several years there have been studies that have shown the effectiveness and safety of some generic drugs. Some doctors and patients emphatically believe that certain generic drugs are not as effective as the products they are meant to replace (i.e., Prozac, Oxycontin), and consumers would undoubtedly benefit from more clinical studies done on drug by drug basis. Further complicating the problem is a gap in prescribing doctors' understanding bioequivalence standards, as a physician survey in the US found that only 17% of prescribing physicians correctly identified the USFDA's standards for bioequivalency of generic drugs. A latest development to address the issue enables interested doctors and consumers to check generic drug interactions and outcomes detail to the specific drug and drug company.

As an interesting case study in the use of generic equivalents of name-brand agents, warfarin has been only available under the trade name Coumadin in North America until recently. Warfarin (either under the trade name or the generic equivalent) has a narrow therapeutic window and requires frequent blood tests to make sure patients do not have a subtherapeutic or a toxic level. A study performed in the Canadian province of Ontario showed that replacing Coumadin with generic warfarin was considered safe. In spite of the study, many physicians are not comfortable in allowing their patients to take the branded generic equivalent agents. As such, in countries such as Australia where warfarin is prescribed under more than one brandnames (Marevan in 1mg, 3mg, 5mg respectively and Coumadin in 1mg, 2mg, 5mg respectively), the pharmacist may not substitute brandnames.

U.S. generics approval process

Enacted in 1984, the U.S. Drug Price Competition and Patent Term Restoration Act, informally known as the “Hatch-Waxman Act”, standardized U.S. procedures for recognition of generic drugs. An applicant files an Abbreviated New Drug Application (or “ANDA”) with the Food and Drug Administration (FDA) and seeks to demonstrate therapeutic equivalence to a specified, previously approved “reference listed drug”. When an ANDA is approved, the FDA adds the drug to its Approved Drug Products list, also known as the “Orange Book”, and annotates the list to show equivalence between the reference listed drug and the approved generic. The FDA also recognizes drugs using the same ingredients with different bioavailability and divides them into therapeutic equivalence groups. For example, as of 2006, diltiazem hydrochloride had four equivalence groups all using the same active ingredient but considered equivalent only within a group.

On October 4, 2007, FDA launched the Generic Initiative for Value and Efficiency, or GIVE. The initiative will use existing resources to help FDA modernize and streamline the generic drug approval process.

GIVE aims to increase the number and variety of generic drug products available. Having more generic-drug options means more cost-savings to consumers, as generic drugs cost about 30 percent to 80 percent less than brand name drugs.

In the United States, generic drug substances are named through review and recommendation of the United States Adopted Names (USAN) Council.