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Generic Drugs FAQ:
Why are generic drugs less expensive?
Generic drugs are less expensive because generic
manufacturers don’t have the investment costs of the developer
of a new drug. New drugs are developed under patent protection.
The patent protects the investment—including research, development,
marketing, and promotion—by giving the company the sole
right to sell the drug while it is in effect. As patents near
expiration, manufacturers can apply to the FDA to sell generic
versions. Because those manufacturers don’t have the same
development costs, they can sell their product at substantial
discounts. Also, once generic drugs are approved, there is greater
competition, which keeps the price down. Today, almost half of
all prescriptions are filled with generic drugs.
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