Generic drugs are often touted as money-‐saving options, a valuable way to keep health care affordable for all stakeholders – including employees, employers, insurance companies and the government. But there’s a lot of confusion about how a generic stacks up against an originator, or brand name, drug.
A generic drug is a copy of a brand name product. By law, generic drugs must contain identical active ingredient as the brand name drug. Health Canada ensures the Canadian public gets medication that is therapeutically safe, effective and of high quality, and the manufacturer must prove the drug performs the same way on the body as the brand name drug.
A generic drug may look different due to non-‐medicinal ingredients, like fillers and ingredients that give the drug its colour, but studies must prove these ingredients have not changed the quality, safety or effectiveness of the drug.
The major difference between generic and brand name drugs? The cost. When a company brings a new drug onto the market, substantial money has been spent on research, development, marketing and promotion of the drug. A patent is granted, giving the company an exclusive right to sell the drug as long as the patent is in effect. As the patent nears expiration, manufacturers can apply to produce generic versions of the drug, and without the initial development costs, can afford to make and sell it at a lower cost. When multiple companies begin producing and selling a drug, the competition among them can drive the price down even further. In fact, generic drugs can cost up to 65% less than their brand name equivalent.
By using generic versions whenever possible, not only will you save at the pharmacy, but depending on your plan design, you could be reimbursed up to 30% more of your prescription purchase – giving you twice the savings.
Regardless of whether your prescriptions are covered through a public plan or by health premiums at work, everybody pays for high-‐priced drugs through taxes and/or increased premiums. Choosing generic drugs is safe and effective, and can result in significant savings for all stakeholders.