WHEN my family entered the generics drugs business, I have been asked two things by friends: (1) are generics drugs really as effective as branded ones, and (2) if they are as effective, why are they so much cheaper? Isn't quality directly proportional to price—the higher the quality, the higher the price?
Before I answer the above, let me give an overview of the cost differentials, for the benefit of those who are not familiar.
The two most popular branded medicines for headaches cost around P3 per tablet; the generic equivalent, Paracetamol, costs only P0.70. One popular branded tablet against cholesterol costs around P48 per tablet; the generic equivalent, Simvastatin, costs only P8.60.
A popular branded anti-biotic costs P6.75 per tablet; the generic equivalent, Amoxicillin, costs only P2.70. A popular branded medicine against cough and colds costs P10.50 per tablet; the generic equivalent, Carbocisteine, is only P2.70.
Now what differentiates branded medicines from generic ones? Only the brand. Period.
Most branded medicines are invented in the USA. Drug patents in the US last 20 years, which means, the pharmaceutical firm who invents a drug has 20 years of legal protection to exclusively produce and market such drug. Having no competition, they can price their product as high as they want.
Studies have shown that the cost of discovering a new innovative drug is anywhere from US$300-$800 million, a huge amount, indeed. Naturally, the drug companies will have to input the recovery of this huge cost in their pricing.
Now, after the expiration of the 20-year drug patent, the said drug is now considered public domain, which means, any pharmaceutical company anywhere in the world can now legally produce its generic equivalent copying exactly the same ingredients as the original branded one.
This sufficiently explains why scientists and government doctors say that generics drugs are as effective as branded ones.
The huge gap in prices between branded and generic medicines can be explained as follows:
1. Brand-name drug companies have huge offices worldwide with huge numbers of highly-paid executives and staff, complete with company cars and other perks. Compare that with the lean operation of a generics drug company -- the cost differential will be substantial.
2. Branded medicines entail millions upon millions of advertising costs; branded ones have practically no advertising expenses.
3. It is an open secret that the big drug companies give out perks to doctors to push for their branded products, such as, all-expenses-paid travels to attend conventions here and abroad, laptops, cell phones, air conditioners, what have you. With thousands of doctors nationwide, these entail huge budgets that all add to the cost of their branded medicines.
So are you still wondering why branded drugs are so expensive? My final advice: I have heard of believable stories about sub-standard generics medicines being produced by some unscrupulous laboratories. To avoid sub-standard medicines—branded or not—buy only from reputable pharmacies, especially the national chains which thoroughly inspect the drugs they buy.
Some small hole-in-the-wall pharmacies, even sari-sari stores, sell at much lower prices but you are not sure of the integrity of their source of medicines. Don’t gamble your health for a few pesos of savings.
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