Don’t look now, but there’s a huge price disparity between brand-name and generic drugs. You probably knew that already. What you might not know is why. If brand-name and generic drugs essentially have the same active ingredients, it stands to reason they should cost about the same at retail. But they do not.

Price disparities boil down to two components: FDA approval and patents. Once you understand the influence of these two factors in drug manufacturing, the reason behind price disparities becomes painfully clear. The reason you spend more for a brand-name American drug as opposed to a generic product from an online Canadian pharmacy become self-evident.

Regulation and High Prices

According to FDA statistics cited by Healthline, generic drugs cost, on average, 85% less than their branded counterparts. Moreover, some 74% of all prescription medication spending in the U.S. goes toward brand name medications – despite the fact that 90% of all prescriptions are filled with generic drugs. Those are amazing statistics. They frame the price disparity issue perfectly.

As to what creates such a disparity, let us start with the FDA’s approval process. Describing it as complicated doesn’t even begin to explain what pharmaceutical manufacturers have to go through to get a new product to market. Between research and the many rounds of clinical testing required, a manufacturer can literally spend billions of dollars developing a new drug.

That is money that eventually has to be recovered through sales. Otherwise, a manufacturer goes out of business. To help them out, the government awards exclusive patents to pharmaceutical companies for the first decade. This allows manufacturers to recover their development costs and make some profit. But with such a short window to operate, they have to charge exorbitantly high prices to make it work.

In essence, it boils down to regulation. The U.S. regulatory process makes it prohibitively expensive to develop new drug therapies. The only way the government can encourage pharmaceutical companies to do what they do is to grant exclusive patents and let them charge extremely high prices for at least a decade.

Bring on the Generics

The expiration of a given patent opens the door for other pharmaceutical companies to manufacture generic alternatives. Generics still have to go through FDA approval, but the process is much shorter and less complicated because the new product is the chemical equivalent of the branded drug it is intended to replace.

This ultimately means that generic manufacturers do not spend nearly as much money on research and development. They also don’t have to spend as much time. Their total financial investment is considerably less, allowing them to charge lower prices and still make a profit.

It is possible to purchase your prescription drugs more cost-effectively from companies like Canada Pharmacy because generics exists. But even purchasing a generic at your local supermarket pharmacy will save you a ton of money.

Ask Your Doctor

There are times when a doctor might insist on a brand-name drug. However, patients always have the right to request a generic prescription. The take-away here is that patients should never be afraid to ask. In fact, it is important to have open and honest discussions with your doctor about these sorts of things. If a generic will do the trick, you should have the option of choosing it over a brand-name product.

And now you know why brand-name prescription drugs cost more than generics. Rarely is the price disparity a quality issue. In almost every case, it is a matter of manufacturers charging more to recover their investment. That will not change until our regulatory system changes.

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