Generics - Affordable Alternatives to Brand-Name Drugs

Generics are an essential part of the German healthcare system, offering a cost-effective alternative to brand-name drugs without compromising on efficacy and quality.

In the EU, drug patents generally expire after 20 years, allowing generics to enter the market at that point.

Generics offer numerous advantages. They account for nearly 79% of Germany’s pharmaceutical needs. For certain active ingredients, such as metamizole and ramipril, up to 97.9% of prescriptions are filled with generics, contributing significantly to cost savings in healthcare.

One price comparison highlights the difference: In 2021, the average cost per day of treatment with a patented drug was €4.83, while a generic cost only €0.16. Generics are subject to strict quality controls and approval processes.

What Are Generics and Their Core Principles

Generics are affordable versions of brand-name drugs that become available after patent expiration. In the EU, this protection typically lasts 20 years, after which other manufacturers can produce and sell the active ingredient as a generic.

Definition and Functioning of Generics

A generic drug contains the same active ingredient as the original and works identically in the body. This equivalence is thoroughly tested during the approval process.

Generics are often significantly cheaper than the original, with rheumatoid medications, for example, sometimes costing only a fraction of the brand-name version.

Patent Protection and Market Entry

When patent protection ends, generics are often rapidly introduced, which frequently leads to a decline in the original drug’s revenue. A prominent example is Lipitor, containing the active ingredient atorvastatin.

The launch of generics is subject to strict regulations and usually occurs 10 to 15 years after the original's initial approval.

Composition and Active Ingredient Equivalence

Generics must match the brand-name drug in terms of active ingredient, strength, and form. Only excipients may vary. Bioequivalence studies confirm that generics provide the same therapeutic effect as the original drug.

Special regulations apply to biosimilars in the EU, which mimic biotechnologically derived active ingredients.

Cost Advantages and Savings in the Healthcare System

Generics are much cheaper than brand-name drugs. While the average daily cost of treatment with brand-name drugs in 2021 was €4.83, generics cost only €0.16 per day. This price difference results in significant savings for the healthcare system.

Patients typically pay only 10% of the cost for generics, compared to 20% for brand-name drugs. Additionally, health insurers receive a 10% discount from the manufacturer, further reducing healthcare costs.

Generics account for 79% of pharmaceutical needs but only 7.2% of healthcare spending. In 2023, the German Pharmaceutical Market Restructuring Act (AMNOG) achieved €8.3 billion in savings for health insurers, underscoring the importance of generics in reducing healthcare costs.

Quality Assurance and Approval Process

Generics undergo strict approval processes to ensure their safety and efficacy. Regulatory agencies such as the German Federal Institute for Drugs and Medical Devices (BfArM) and the Paul-Ehrlich-Institute oversee these processes in Germany.

Strict Controls by BfArM and EMA

In Germany, BfArM is responsible for the approval of generics, while the European Medicines Agency (EMA) regulates the European market. Approvals are initially valid for five years and must be reviewed thereafter. Any modifications to the generic must be reported to the relevant authorities.

Bioequivalence Studies and Efficacy Verification

Generics must demonstrate bioequivalence to the original drug. These studies assess how the body absorbs the active ingredient. A generic is only approved if it meets established bioequivalence limits.

Production Standards and Quality Control

Manufacturers of generics must adhere to high production standards, known as Good Manufacturing Practice (GMP), to ensure consistent quality. Regular inspections guarantee that all legal requirements are met, thus ensuring the safety of generics.

Differences Between Brand-Name Drugs and Generics

When comparing brand-name drugs with generics, several differences emerge. Both contain the same active ingredient in the same dosage, ensuring therapeutic efficacy. Generics must also have bioavailability very close to that of the original drug.

Differences may exist in excipients, such as binders or colorants, which can occasionally cause rare intolerances. Generics may also differ in production methods and form. However, their name, color, and form can vary as long as quality and efficacy remain consistent.

Approval processes ensure that generics meet the same quality and safety standards as brand-name drugs. The price difference between generics and brand-name drugs can be substantial, making generics a more economical alternative.

FAQ

What are generics?

Generics are copies of brand-name drugs produced after patent expiration. They contain the same active ingredients as brand-name drugs but often use more affordable excipients.

How long is patent protection for brand-name drugs in the EU?

In the EU, patent protection for brand-name drugs lasts for 20 years. After this period, other manufacturers are permitted to produce and sell generics.

Are generics as safe and effective as brand-name drugs?

Yes, generics are as safe and effective as brand-name drugs. They must pass strict approval and quality control processes. Bioequivalence studies confirm that generics perform the same as the original drug.

How much cheaper are generics compared to brand-name drugs?

Generics are significantly cheaper than brand-name drugs. In 2021, the average cost for a daily dose of a generic was €0.16, compared to €4.83 for brand-name drugs.

Which agencies regulate the approval of generics?

The German Federal Institute for Drugs and Medical Devices (BfArM) and the European Medicines Agency (EMA) oversee the approval of generics.

Are there differences in composition between generics and brand-name drugs?

Generics and brand-name drugs contain the same active ingredient in the same dosage but may differ in excipients and manufacturing processes. However, bioavailability must be very close to that of the original.

What percentage of pharmaceutical needs are met by generics?

Generics fulfill 79% of pharmaceutical needs in Germany while accounting for only 7.2% of healthcare spending.

What benefits do patients gain by using generics?

Patients save significantly with generics due to lower co-payments, and generics help reduce the financial burden on the healthcare system.