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Why are brand name drugs more expensive than generics?

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Published on Dec 17, 2009

Brand-name drugs are more expensive than their generic alternatives for a few reasons

What you should know:
•Generic drugs are manufactured after the patent has expired
•Brand name drugs companies devote money to expensive advertising and packaging

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• What are Generic Drugs?
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• Generic Drugs
No matter how it's marketed, how it's packaged, or what it's called, every drug is just a combination of ingredients. And, in many cases, you can buy the exact same medication without paying brand name prices. The use of generic drugs saves consumers an estimated $10 billion a year in drug costs... Read More: http://bit.ly/aQxhmC
• Generic Drug Savings
Generic drugs contain the same active ingredients at the same strength and purity as their brand-name counterparts, but they come at a fraction of the cost. According to the Congressional Budget Office, generic drugs save consumers an estimated $8 billion to $10 billion a year... Read More: http://bit.ly/ckxPJN

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Transcript
Hi, I'm Melissa Atieh and I'm a CVS pharmacist. Brand-name drugs are more expensive than their generic alternatives for a few reasons. First, companies spend millions of dollars researching and developing new drugs, which involve screening promising candidates in a lab, then testing the drug, and finally running a drug trial to check for safety and effectiveness. The cost of these trials and screenings is reflected in the cost of the actual drug. Once they've created the drug, brand-name companies protect their investment by filing for patents. The cost of the patent is also seen in the cost of the drug.
Generic drugs are manufactured after the patent on the brand name has expired. Generic drug manufacturers do not have to pay for (or try to recoup) all of the upfront research costs it took to actually develop the drug and get it on the market.
In addition to creating and patenting the drug, brand-name drug companies, unlike generic drug makers, devote a certain percentage of their budget to advertising and packaging, which can be very expensive.
So that's why generics are cheaper than brand-name drugs. If you have any questions, talk to your CVS pharmacist. We'll be happy to help.

Source: CVS Caremark Health Resources

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