Probing Question: Why do name-brand prescription drugs cost more?
Identical in dosage, safety, strength, quality and performance, generic prescription drugs are chemically equivalent to name-brand prescription drugs. They involve the same risks and impart the same benefits. So why are name-brand prescriptions more costly than their generic counterparts? Cheston Berlin, professor of pediatrics and pharmacology in the Penn State College of Medicine, attributes the difference to “innovation costs,” specifically research, development, and marketing. “After a new drug is developed, the company must submit it for FDA approval,” Berlin explained. “The FDA then grants a patent to the company for up to 20 years. The company uses this time to repay innovation costs. Also, during this time, no other company may produce a bioequivalent product.” Once the patent expires, competitors are free to produce identical drugs under generic names. With no innovation costs to cover, these substitutes can be offered at lower prices. Dennis Shea, professor of health policy a
