With my horrible allergies and head cold I came up with a question while at the pharmacy. Why would the over the counter generic brand of Clairitin (loratadine) sell for a THIRD the cost of the name brand next to it on the shelf?
Seems hard to believe that the confidence in the name alone is worth that much. The only other reasons I could think of: 1) there really is a difference in the chemical make up and performance of the product (hard to believe), 2) the generic is underpriced so as to get people sold on it as a product, or 3) the price on the name brand just hasn’t fallen yet.
I can’t believe that my micro prof was wrong when he said that the market reaches a perfect equilibrium price That being said…
Even perfectly acceptable economic substitutes can be valued differently. The makers of the cheaper medicine are bearing the cost of being perceived as less reliable. The confidence in the name to which you refer is worth, more or less, precisely that price difference. The off-brand product is being manufactured with the same strictures from the FDA under which Loratidin labors.
Your point #2 might be the case. A little market exposure, a little consumer loyalty…
Brand name drugs cost more in order to offset the research and developement costs involved in creating a drug. That’s the simple answer. Someone may come along and elaborate on the economics aspects, but the main reason is cost recovery.
Nah. The cost has long since been recovered while the developing company had a patent, and therefore exclusive rights to manufacture the drug. Generics hit the market after the patent runs out (or in rare cases when the owner licenses it). The only reason the name-brand versions continue to cost more is because people are willing to pay more for them – it’s exactly the same reason why store-brand orange juice costs less at the grocery store. It all comes from the same oranges.
You’re absolutely right. Although I’d replace “willing to pay for them” with “insist on paying more”. It’s crazy how many people think that generics are poison, and that only brand name drugs work. These people are almost invariably the ones whose insurance doesn’t charge an arm and a leg for a DAW on their script.
Hah, tell me about it, I don’t know how many people come in and get all in a uproar about the doctor allowing a substitution and then demand a consultation to figure out what this “new” (generic) drug does. They don’t believe me when I explain to them that it is the same drug, the same amount, under the same strict guidlines of manufacture.
Brand names can get away with preposterous price hikes over the generic specifically because so many people are utter morons. Chemical is the same, other substances is the same, very often the MANUFACTURER is the same, but the extremely stupid insist upon their little designer label.
While I’m sure R&D costs are huge, there is also the matter of advertising. Super Bowl television ads do not come cheap, and all major Pharmaceutical companies also have armies of “drug reps”.
All of that said, my fiancée gets excruciatingly painful headaches when she takes a generic version of a particular medication, but no such side effects taking the brand name. This is at least single-blind, because the substitution was made without her knowledge, and she was able to remember (because of the excruciating pain) when the first headache hit. She asked the pharmacy to check their records and behold – they matched up. She switched back to the brand name and (possibly psychosomatically) the headaches stopped.
Before you tell me “that’s impossible” (which would be stupid, since it happened), I’ll concede that (a) there’s no difference in principle between them, and (b) it’s possible that this was a coincidence, and (c) one anecdote does not prove anything.
I just thought you might want to take this anomalous data point into your consideration.
I have heard some argue that the generics might be made a bit different, even if the substance is the same. Perhaps the speed of release varies and is not as strictly controlled?
Anyway, what is the implication for microeconomics that such a gigantic price difference is explained by a preference for a brand name that signifies nothing? Will the price drop eventually? If no substantial drop occurs, it seems that the implications for using consumer sovereignty and consumer preferences for some policy analysis could be highly flawed.
Generic drugs can, and often are, somewhat different (unless it is the original manufacturer making the “generic”). In terms of their purpose, they are identical, but their chemical “packaging” is often quite different. I don’t have access to the USP or EPs at the moment, but IIRC a typical generic drug requirements would be something along the lines of:
same active ingredient(s)
*same dose of active (within 97-102%)
*same levels of certain impurities (97-102%)
*same dissolution times (dose release) (95-105%) …etc
These requirements do NOT state that all excipients (that is, the other, non-active ingredients in the drug) must be the same. Since they are all chemically inactive in humans, some can be interchangeable - that is, the generic product can choose a different binder or a different coating compound. As long as these generic drugs then also pass the stability and other requirements regarding shelf life and such, they are free to go onto the market.
Jurph - like your wife, I have had an adverse reaction to an excipient compound before - or at least, that’s the best explanation that can be found. It was another brand of ibuprofen, which I use regularly, but this brand gave me headaches, lightheadedness, dizzinesss, stomach aches (though it did alleviate the cramps I was having), muscluar weakness, etc. I was in high school, and was terrified that something REALLY bad was going to happen, I remember telling a classmate and the teacher in each course I was in what I had taken, how much, and when, so that they could notify the nurse/paramedics if I passed out or somethng. I have never used that brand again, and I tend to be wary of taking variations of ibuprofen, since I now know of 2 that I have no problems with and I don’t want to take a chance. I also get migraines when I take the placebo pills of my birth control, but no migraines with the hormone pills. I’m a clinical trial freak, I tell you!
Generic products as a rule are of lower quality than brand names, for the simple reason that generics mean consumers can’t tell which company made what, and therefore they do not have to compete on quality. While I’m sure the active drug is the same, perhaps the type of stabilizer is different, using a cheaper method, or there are more impurities.
Look at Generic peanut butter? Notice how there is more likely to be peanut oil pooled on the surface of a freshly opened jar? That’s because they probably save money by using less stabilizer or use an inferior but cheaper version.
Even packaging is usually scrimped on. The generic cheese sticks we bought my daughter taste exactly like the brand names ones. However, it’s almost impossible to get them out of their individual wrappings. The brand name ones use an expensive, high tech adhesive like post-it adhesive, and peel open easily. The generics also have thinner plastic wrappings which rip when you try to peel the things open.
But sure, part of the increased price is that brand name companies feel that the brand adds value because it is a guarantor of quality. They are capitalizing on their hard-won reputation.
Actually, many generic drugs are not genericly labelled, just copies once the pill’s patent expires, or imitations. So at the CVS pharmacy chain, you can see CVS selling the same pill next to Clairitin, with the cute note on it saying “compare contents to Clairitin.”
With food and other non-medical items, I agree that imitation products and generic products do seem cheaper in quality or at least vary more in quality control which probably gives generic meds a bad name.
By the way, the seperation in the peanut butter is a good thing, less chemicals in your food. Just stirt and refrigerate. Also, avoid cheese sticks, just learn to cut cheese for your kid until she can cut them herself. Paying some company to cut cheese for you is crazy, especially if they need to spray stuff on it to make it peel nicely.
:rolleyes:
NOT ALL generics are alike! Remember this: the US FDA does ONLY ONE approval of generic version drugs. The manufacturer submits his approval samples, the FDA lab tests them, and THAT IS IT! Unscrupulous generic drug companies have been known to alter the formulations,once approval is obtained-what is really scary: in recent years certain third-world drug mfgs, have entered the generic drug business. That amoxicillin that you are depending on to fight your throat infection?It might be 30% understrength, made in India in a filthy factory. You could wind up dead!
Of course, be consoled that you saved all that money!
So, generic aspirin, yeah, I would buy it!
Generic penecillin? NO WAY-I’ll gladly pay a few extra$, and have peace of mind!
That being said…