The cost of developing drugs and use of generics

Generics/Research | Posted 27/05/2022 post-comment0 Post your comment

In a mini review, author Professor Roy G Beran explains how generics can be produced at a much lower cost than originator drugs [1].

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The Oxford English Dictionary defines ‘generic’ as meaning ‘Characteristic of or relating to a class or group of things; not specific: (of goods, especially medicinal drugs) having no brand name, not protected by a registered trademark; lacking imagination or individuality; predictable and unoriginal’ [2]. Despite such essentially derogatory definition, prescription of generics is being mandated in Australia, when using electronic prescriptions [3, 4]. The rationale to enforced use of generic drug prescription of the active ingredients, within a given medication, is to respect economic consideration [5, 6].

The cost, from concept through to formulary inclusion, for any given originator medication, is estimated to be approximately US$2.7 billion [7]. The average time required, from development to marketed medication, is ~7.3 years [7], with a range of between ~6 to >15 years [7], during which time the research and development (R & D) costs are borne by the relevant pharmaceutical company. There has been a concerted effort to reduce the perceived R & D costs to well below this figure of US$2.7 billion [7], but such consideration makes no allowance for the failed development of many conceptual products. More than 90% of chosen molecules, initially tested in animals, fail to proceed to human trials [7]. Those questioning the R & D expenditure often ignore this cost [7], but to do this is often mistaken because, even at the animal testing stage, <10% of potential compounds advance to human trials [8] and, of these, a significant number still fail human trials. All of these costs must be included in the whole range of medications being developed by that R & D pharmaceutical company, to achieve equitable outcomes.

The cost of developing a generic drug competitor, when compared with those costs associated with an originator R & D medicine, is considerably lower than even their sale prices in developed nations would suggest [9], especially if developed in India, the home of many generic drug compounds [9].

Conflict of interest
The author of the research paper [1] declared that there was no conflict of interest.

Abstracted by Professor Roy G Beran, Neurology Department, Liverpool Hospital, Liverpool, Australia.

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1. Beran RG. Generic substitution in patients whose illness has a narrow therapeutic index, such as epilepsy. APHE. 2020;1(2):1-5.
2. Lexico. Generic. []. Oxford, UK: Oxford University Press; [cited 2022 May 27]. Available from:
3. The Pharmacy Guild of Australia. Electronic prescriptions – ePrescriptions update - 7 December 2020 [homepage on the Internet]. [cited 2022 May 27]. Available from:,the%20capability%20to%20issue%20ePrescriptions
4. Australian Government. Department of Health. Electronic prescribing [homepage on the Internet]. [cited 2022 May 27]. Available from:
5. Straka RJ, Keohane DJ, Liu LZ. Potential clinical and economic impact of switching branded medications to generics. Am J Ther. 2017;24(3):e278 89.
6. Dunne S, Shannon B, Dunne C, et al. A review of the differences and similarities between generic drugs and their originator counterparts, including economic benefits associated with usage of generic medicines, using Ireland as a case study. BMC Pharmacol Toxicol. 2013;14:1.
7. Prasad V, Mailankody S. Research and development spending to bring a single cancer drug to market and revenues after approval. JAMA Intern Med. 2017;177(11):1569-75.
8. Akhtar A. The flaws and human harms of animal experimentation. Camb Q Healthc Ethics. 2015;24(4):407-19.
9. Hill AM, Barber MJ, Gotham D. Estimated costs of production and potential prices for the WHO Essential Medicines List. BMJ Glob Health. 2018;3(1):e000571.

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