When a manufacturer of pharmaceuticals develops a new type of drug, the manufacturer often applies for a patent, meaning the manufacturer can secure the exclusive right to sell the product for many years ahead. When the patent expires, it becomes possible for other companies to develop and market a copy – a generic pharmaceutical.
Generic pharmaceuticals contain the same active ingredients as original pharmaceuticals and must meet the same legal requirements. For these reasons, generic pharmaceuticals have the same quality, live up to the same safety requirements and are equally efficacious as original pharmaceuticals. However, companies that manufacture generic pharmaceuticals do not have the same expenses when it comes to research and development as do manufacturers of original products. That is also why original products are protected by patents in the first years of selling.
Thereafter, a generic pharmaceutical can often be sold to consumers at a price 20-80 % lower than that of the original pharmaceutical and these savings benefit both society and the consumer. Saving money by using generic pharmaceuticals has two advantages: 1) it ensures that new pharmaceuticals are introduced to the market, and 2) the public health budgets will have room for introducing new types of pharmaceuticals and treatments. At the same time increased competition creates an important incentive for developing new pharmaceuticals that can be sold at attractive prices. When more pharmaceuticals are manufactured by both original and generic manufacturers, society benefits from better security of supply and consumers enjoy the benefits as well.