Why Are Generic Medicines Cheaper? Save Money With This Advice
You could be saving so much money per year by buying over the counter generic medications, as opposed to buying branded medication. But, why are generic medicines cheaper?
In short, generic medicines are cheaper than branded medication because manufacturers do not have to pay the costs of developing or marketing the new drug from scratch. The initial manufacturer had to pay upfront costs for drug trials, safety testing and marketing. Once a company develops a new drug, they are given a patent for a number of years so only they can sell their medicine. After this expires, any manufacture can make a generic version of this drug without having to develop or market the drug, therefore it is much cheaper. Many companies go on to produce generic forms of the drug which also drives up competition and drives down the generic price further.
TheKing’sFund have published a summary called ‘Better Value In The NHS’. This explains that ‘increased levels of generic prescribing from 1976 to 2013 has in effect saved the NHS around £7.1 billion’. Whilst we as people (unless you’re a prescriber) do not prescribe medicine, we do buy medicine from pharmacies and stores. By buying generic medicines when you buy them over the counter, you could be saving yourself a whole lot of money over time for very little effort!
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Why Are Generic Drugs Cheaper: Contents
• What Is The Difference Between Branded and Generic Drugs?
– Branded Medicine
– Generic Medicine
• Why are Generic Medicines Cheaper?
– Reason 1: No Development or Marketing Upfront Costs
– Reason 2: Prices Are Driven Down by Competition
• Example Generic Medicines Where You Could Be Saving Money
• Buying Generic Medicine from Cheaper Stores
• Are generic drugs less effective or unsafe?
• Why Are Generic Medicines Cheaper? Final Thoughts
What Is The Difference Between Branded and Generic Drugs?
Branded Medicine
This medicine is created by a pharmaceutical company that owns the rights to that medicine. Pharmaceutical companies, when they develop new safe and effective medications, are granted a patent meaning only they can produce and market that medicine for a number of years. Branded medicine will have the trademark R symbol next to the brand name.
Generic Medicine
Generic medicines contain the exact same active ingredient (ingredient that actually helps in treatment) as branded medicines. However, they can now be manufactured by other pharmaceutical companies because the original patent owned by the initial company has expired. As the patent has expired, different companies produce a generic version of the drug containing the same active ingredient and can sell it under a different name.
Why are Generic Medicines Cheaper?
Reason 1: No Development or Marketing Upfront Costs
According to Lloyd’s Pharmacy, ‘manufacturers who sell the generic version don’t have to contend with the expenses of developing and marketing a new drug.’ What does this mean?
Developing a new drug from scratch is very expensive. The process can take over a decade, and includes:
• Rigorous trials, procedures and testing to ensure the safety and effectiveness of the drug.
• Complex and detailed marketing strategies.
• Paying staff, admin and volunteers.
• Lab and equipment costs.
All of this is very expensive. Therefore, the initial company needs to make their product more expensive in order to get their money back and reap the rewards from their hard work.
Whereas, companies who develop the generic medicine after the patent has expired do not have to spend money developing or marketing the drug. This has already been done. Therefore, they can charge a much cheaper price for the same active ingredient in the medicine.
Reason 2: Prices Are Driven Down by Competition
Why are generic medicines cheaper? When a patent expires for the initial manufacturer, a number of other manufacturers can come along and develop generic versions. It is not just one generic medicine that hits the marketplace.
Often, many companies produce generic versions and become approved to sell their own generic version. As so many companies are now selling the same product, this drives up competition which drives down the cost of their product. By reducing costs, companies hope more people will purchase from them over other generic competitors.
Example Medicines Where You Could Be Saving Money
A perfect everyday example of branded medicine is Clarityn®. If you have not heard of this medication, it is used in hay fever. The generic version, which is the active ingredient, is called loratadine and can be much cheaper. Just look at this article written by the BBC titled ‘Hay fever: Paying the price for an allergy.’ It shows how paying for branded hay fever products is unnecessary and costly.
Look at these prices from Amazon. A box of 30 10mg Clarityn® tablets cost £9.55, whereas a box of 90 (3x the amount) 10mg loratadine tablets cost £2.78. For £6.77 less, you could be getting 3x the amount of medicine. (If you’re buying medicine online, check out this article written by the NHS on medicines information first… there is a section on safely buying medicine online).
This is just one quick example to highlight how prices of medicines can vary so greatly! You will be able to find different prices for both generic loratadine and Clarityn, but this simply shows that Clarityn is far more expensive.
There are so many opportunities for saving money on different branded medicines. Money Saving Expert, Martin Lewis, has already done an absolutely amazing job in this table below. I think it’s valuable information that I wanted you to see! It is objective research which identifies the cheapest possibilities of both brand and generic:
The price savings are staggering! In the short term you may be thinking you won’t be saving much, but this money really adds up fast.
Let’s take the average person. We’ll likely buy some paracetamol or keep a store in the house just in case, probably some ibuprofen, antihistamines if you have hay fever, some mouthwash among other purchases too. This can lead to monthly savings… especially if you buy from cheaper stores too!
Buying Generic Medicine from Cheaper Stores
This is another thing we sometimes don’t really think about. I used to buy any over the counter medicines I wanted from the pharmacy when I had to pick up a prescription. You know… to save time.
However, I soon realised I could have been saving money with no more effort. Generic medicines are even cheaper again in shops such as Lidl, Aldi, Tesco and Pound shops as opposed to Boots, Lloyds and Well Pharmacies. I could be buying this medicine when I’m already in these stores doing my weekly shop.
I personally buy and use a lot of germolene. Foolishly, I used to buy it from the pharmacy when I picked up a prescription. However, turns out there was no need to be doing this… I could get a 30g tube of germolene from the pound shop leading to great savings over time.
The take home message here is, buy generic medicine instead of branded, but also buy it from cheaper places like supermarkets.
Are generic drugs less effective or unsafe?
Generic medicines contain the exact same active ingredient as the branded version. Similarly to branded versions, generic medicine is still evaluated before they are released to the public.
Llloyd’s pharmacy states that ‘generic medicines are evaluated to ensure they respect the same standards of quality, safety, and efficacy as the brand version.’ This means that the medicine is not less effective, nor is it unsafe to use.
If you need further evidence, the FDA, which is the US Food and Drug Administration which promote public health and regulate medicine safety, states in this article:
‘A generic drug is a medication created to be the same as an already marketed brand-name drug in dosage form, safety, strength, route of administration, quality, performance, characteristics, and intended use’. What does this mean overall? It means that ‘generic medicine works in the same way and provides the same clinical benefit as its brand-name version.’ So, yes, generic medicine is effective and safe.
To me, this makes it a no brainer to be buying the cheaper, generic medicine if it has the exact same effectiveness and is safe!
Why Are Generic Medicines Cheaper? Final Thoughts
I hope this article has helped to explain why generic medicines are cheaper than branded versions. Generic manufacturers do not have to pay upfront costs for development or marketing of the drug from scratch. Once a patent expires, many companies produce the drug generically which drives up competition and drives down cost.
As generic medicine is cheaper, and just as effective and safe, I highly advise you to start saving money by buying generically today.
The major take home messages are:
• Buy generic medicines
• Buy them from cheaper places like supermarkets or pound stores instead of pharmacies.
• Generic medicines are equally effective and safe
Want a variety of ways to save money each month, check out this article detailing 10 easy ways to save £250 extra a month!
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