To develop a new medication, certain companies do a tremendous amount of work and research to find a medication that will be effective and safe for use. During development, new drugs are often put under patent protection, which protects the sponsor's investment in the drug's development by giving them the sole right to sell the drug while the patent is in effect. If a drug completes development and is approved by the FDA, it will be approved with both a brand and generic name.
The brand name of a medication is the name given by the company that makes the drug and is usually easy to say for sales and marketing purposes. The generic name, on the other hand, is the name of the active ingredient. The key to understand is, though the generic name exists, the company who developed the drug, through its patents, receives an exclusivity period where it has the only rights to sell the medication under either the brand or generic name. During the period of patent protection, the company sets the price to a point where it can recover research and development costs along with other cost, like marketing, while trying to make a profit.
Although generic drug active ingredients are chemically identical to their branded counterparts, they are typically sold at a cheaper price than the brand name drug.
Generics are less expensive because the drug manufacturer does not have to duplicate the original clinical trials for effectiveness and safety, which lowers the cost to bring the drug to market. Generics are not less expensive because they are lower in quality.
Generic vs. Brand
When it comes to the difference between generic and brand drugs, the generic version of a drug will differ in certain characteristics, such as inactive ingredients (including colors and flavorings). When differences such as certain inactive ingredients (e.g. coloring) are important in the care of a particular patient, it may be appropriate for the prescribing physician to require that a specific brand be dispensed for a particular patient. Even though certain characteristics may differ, such as inactive ingredients, in order for the FDA to approve a generic drug, the differences between a brand and generic drug can not affect performance characteristics, safety or effectiveness. The generic version of a drug will not look like the brand because trademark laws in the U.S. do not allow a generic drug to look exactly like other drugs already on the market.
E.g.: - Crocin contain the molecule Paracetamol and market with the brand name of crocin while Generic version also contain molecule Paracetamol and market with the name of paracetamol only.
Does every brand name drug have a generic drug?
No. New drugs are developed under patent protection, and most drug patents are protected for 20 years after FDA filing. However, it may take many years to research and get the brand name drug to market. When the patent gets closer to expiration, other drug companies apply to the FDA for approval to start selling the generic version of the drug.
A generic drug can be "tentatively approved" by the FDA prior to patent expiration for the brand product. Multiple companies can manufacture and sell generic versions of the brand name product. However, some drugs may never have a generic because manufacturers may deem these products unprofitable or too difficult to manufacture.