Big Pharma Might Cut Research if We Move Towards Generics

As a whole, the pharmaceutical industry is worth nearly 1 trillion dollars. That being said, it is not a surprise that many people want action taken in order to reduce the revenue of pharmaceutical companies and to cause drugs to be more affordable. Statistics show that nearly 7 in 10 use at least one prescription drug, and many people use two. Prescription drugs are a part of many people’s everyday life and they can play a vital role in keeping us healthy

The Move Towards Generics

The average cost of prescription drugs per person is around $1,100. Elderly people take around 3-4 more prescriptions compared to everyone else, so the costs for prescription drugs can really add up. Before insurance or the government kicks in to cover the majority of the cost, the average brand-name prescription drug is $6,800. With name-brand prescription drugs being so expensive to individuals, insurance companies, and the government, people want cheaper options. Generic drugs are always a significantly cheaper option. Most generic drugs are 80-85% cheaper than the name-brand drug.

How Do Generic Drugs Work

When the word generic gets used, there are two types of “generic drugs”. Drugs can be referred to as generic when they are being used in generic substitution or for therapeutic interchange. Generic substitution means that the drug has the same exact molecular breakdown as the name-brand drug. This means it is basically a twin or a copy of the original drug, but it is being sold as a much cheaper price. If you are a patient and a generic substitution is available, you should always choose it. In the case of therapeutic interchange, the drug that is being purchased is very similar is molecular make-up, but it is not identical. An example of this would be buying “Mountain Lightning” instead of buying “Mountain Dew”. These types of sodas are quite similar, but not the exact same.

When a drug is being used for generic substitution, this is because the patent life on the name-brand drug has expired. Name-brand drugs have a patent life of 20 years from the point of which they are discovered. Generally, it takes around 8 years to actually test the drug for efficacy and safety, before it can be commercialized. Occasionally, the patent life can be extended, but once the 20 years is over, the drug can be copied by other manufacturers. Other manufacturers are able to duplicate the name-brand drug usually without much effort, and then they are able to mass-produce the drug. The manufacturer that is producing the generic drug is able to sell it at such a discount for a couple of reasons. The first reason that they can sell generic drugs so cheap is that they did not have to spend any capital on researching and testing the drug. The other reason that they are able to produce the drug so cheap is that they have smaller profit margins.

Why Big Pharmaceutical Companies May Cut Research

Large pharmaceutical companies could potentially decide to either cut research and development funding for new drugs, or they may delay the release of new drugs if generics become more widely used in place of new name-brand drugs. While some people argue that this is corrupt, others would argue that it is necessary. Large pharmaceutical companies spend millions and sometimes even billions of dollars to develop name-brand drugs. Many times, the drug that they are developing cannot be commercialized due to safety or poor efficacy. That being said, when a large pharmaceutical company is able to produce a new drug, they must try to recoup all of the expenses that went into developing that drug, and they must also try to make up for the millions of dollars lost on trying to develop other drugs that failed. For those reasons, pharmaceutical companies cause these new, name-brand drugs to be extremely expensive. Keep in mind that after they bring the drug to market, they only have 10 or so years before the 20 year patent expires and a generic is going to be produced.

If generics are being used for therapeutic interchange, and new name-brand drugs are ignored by providers or not covered by insurance, large pharmaceutical companies will lose an enormous portion of their revenue. With a lack of revenue coming in, they will no longer be able to spend as much money on research and development to discover new molecules and drugs that could be better than the current generics.


Overall, there isn’t a simple fix to this issue. Name-brand drugs are extremely expensive, but large pharmaceutical companies rely on the profits of those drugs in order to create new drugs. Something to keep in mind is that a generic drug that is a generic substitution (exact copy) is only a generic because the 20-year patent expired on the name-brand drug. This means that if there is a shift to only use generic drugs, all of the drugs and therapies that would be used would be at least 20 years old. If new drugs aren’t continually being researched, discovered, and developed, we will never have improved medications or cures to different types of diseases. Imagine a world without the polio vaccine, or without the small-pox vaccine. Without the discovery of antibiotics, the global life expectancy would fall from 72 years to approximately 50 years. All in all, the discovery of new drugs is vitally important to human health, but the current costs of prescription drugs are far too expensive as well.