Generic Drugs: Rx for Savings

One way to cut the exploding cost of prescription drugs is to switch to generic drugs. Generic drugs cost less and work the same way as the brand names.

"Today, generic drugs really are on a par, therapeutically, with brand-name drugs," says pharmacy professor Tim R. Covington, Pharm.D. Dr. Covington is executive director of the Managed Care Institute at Samford University's McWhorter School of Pharmacy in Birmingham, Ala. "Both the safety and efficacy are there. Confidence levels in generics should be very high."

The cost of medicine is one of the fastest-growing parts of U.S. health care spending. In 1990, Americans spent $51 billion on prescription drugs, according to the federal Centers for Medicare & Medicaid Services (CMS). By 2010, CMS predicts, we'll lay out $366 billion. That's a seven-fold increase in less than two decades.

How much money can generic drugs save? On average, brand names cost more than twice as much as generics, but the difference can be much greater. Dr. Covington and his staff checked the prices of 12 common brand-name drugs and their generic equals. In that group, the brand-name drugs cost 18 times more than the generic drugs last year. One anxiety drug cost 78 times more than its generic double.

If generics are usually just as good, and cost less, why do they make up just 42 percent of all prescription drugs sold in America? And why do patients and doctors lean so much toward brand names?

Limited availability

Many effective drugs are not available as generics. While a drug company holds a patent on a drug, other companies cannot make the drug.

"There's no question that the high-profile brand name does increase the demand for the product," says pharmacy professor Daniel A. Hussar, Ph.D., of the University of the Sciences in Philadelphia.

In fact, Dr. Covington estimates that drug companies spend $3 billion annually on advertising brand-name drugs to consumers through newspapers, magazines, radio, television and the Internet. Consumers are encouraged to ask their health care providers for drugs they see in advertisements. "It's a lot of money, but they spend it because they'll realize an estimated $5 return for every $1 they spend on these ads," he says.

Most patients tend to accept names of drugs they know, made by firms they know. They also tend to go along with whatever drug their doctor prescribes. Experts say this is most true among seniors. As a group, they're less likely to question their doctors.

The generic makers don't bombard doctors' offices with drug salespeople. The big brand-name makers do. The brand names are always right in front of the physician's face.

Although generic drugs must have the same active ingredients as brand-name drugs, they may have different inactive ingredients -- additives used for color, flavor, binding or bulk. In some cases, the inactive ingredients in a drug (generic or brand) can cause allergic reactions. Because inactive ingredients may differ, your reaction may differ. Dr. Covington and Dr. Hussar don't view this as a serious problem for generic drugs. Both say they and their families take generic drugs with confidence.

In certain cases, doctors prefer brand names for medical or technical reasons. If you ask, the doctor should be able to tell you why, Dr. Hussar says. Drugs on this list include blood thinners, heart stimulants and thyroid medicines.

No matter what the drug or medical issue, experts say, you're on solid ground in asking your doctor whether a generic drug might work just as well for you.

What is a generic drug?

Generic drugs are a therapeutic "copy" of the brand-name drug, usually made by another firm. U.S. Food and Drug Administration rules state that a generic drug must be "bioequivalent" to the brand-name drug. That means it must have the same active ingredients, strength, dosage form, safety, quality and performance. The drug must be absorbed into the bloodstream at the same rate and extent as the brand name.

In some cases, there is no generic option because the prescribed drug is still under patent. Generic drug makers can't copy a new drug until the patent has expired. A less costly drug, however, might be available in the same class as the one you're taking. For instance, there are several drugs that lower cholesterol and are part of the same class of drugs. But the prices of those drugs can vary quite a bit.

Ask your doctor if a generic drug or a lower-cost brand-name drug will work just as well for you.