Saving Money With Generic Drugs

June 5, 2015

prescription drug costs

According to the Wall Street Journal the cost of prescription generic and brand-name medications rose 10.9% last year. For every dollar you or your employer spend on health care premiums, 15 cents goes toward the costs of producing and marketing brand-name prescription medicine. These costs also get passed on to the consumer/patient in the form of higher prices. When you rely on maintenance medication for particular health conditions, these costs can take their toll. Thankfully, generic prescriptions exist for most medications at much lower prices than those of their flashier brand-name counterparts, providing some relief in the neverending escalation of healthcare costs.

What is a generic drug?

A generic drug has a similar chemical or drug formulation that acts on the body with the same strength and absorption process of its brand-name equivalent. It must contain the same active ingredients, have identical strength and form, and have a similar route of administration as the brand-name drug. The generic drug must also be used for the same ailments that the brand-name drug is used. All of this is required for FDA approval, which judges the generic to be bioequivalent if it passes the criteria described above and is thus approved for sale.

How are they different from brand-name drugs?

Legally, the two kinds of prescription drugs (brand-name medications and generics) are required to look different from each other, and, due to differences in coating, color, and pill size, may taste different as well. These differences are purely cosmetic; sometimes the shape or coating on a brand-name drug will make it easier to swallow or digest, but this does not make it better or more effective. The major difference between the two, however, is price. The average retail price of generic prescription drugs in 2007 was $34.34. The average retail price of a brand-name drug was more than 3 times higher: $119.51.

Generics will also be named by their active ingredient; brand-name drugs will have a fancy, marketing-room devised and tested moniker. For example, warfarin is the generic equivalent of Coumadin (blood thinner), and simvastatin is the generic substitute for Zocor (cholesterol medicine). It’s good to become familiar with the generic names; there’s no point in paying for brand names just because they are more recognizable or easier to say.

Do all brand-name drugs have generics?

The short answer is no, but 80% of FDA-approved prescription drugs do have available generic equivalents. Brand-name drugs have patents that last anywhere from 10 to 14 years. After that patent expires, manufacturers are free to create a generic version. One benefit to this is that we know a lot more about the drug interactions and safety of generic drugs due to their longevity. To see what generic drugs the FDA has approved lately, visit You also can look up information on specific generic and brand-name drugs on the Drugs and Supplements page at For some even heavier reading, the FDA’s Orange Book is the complete list of approved drug products and therapeutic equivalence evaluations.

One other point to keep in mind on this topic is that if there is no generic equivalent of your brand-name drug, there may a generic equivalent in the same class of drugs. For example, if you are taking a statin drug for cholesterol with no generic equivalent, you may be able to switch to another statin drug that does have a generic equivalent. Or, if you are taking Xarelto for blood thinner (a new drug with no current generic), the generic version of Coumadin known as warfarin may work just as well. In all medical issues please consult your doctor, pharmacist, or other medical professional before making any decisions.

Why are generics cheaper?

Companies producing generic drugs have a much lower overhead than the original creators of the drug. Billions of dollars are spent each year by pharmaceutical companies to create, test, market, and promote their products. When you purchase a brand-name prescription drug, included in the price are all these exorbitant costs of marketing, promotion, and development. Generics have none of those costs associated with them and therefore are not sold at as high of a markup. The first generic version of a brand-name drug lowers the price of the drug dramatically, but the largest price reduction truly occurs when the second generic version of the drug hits the market (in general, competition lowers prices).

How much cheaper are generics?

Generics can be as cheap as 1/4 of the price of a brand-name prescription drug. In 2010 alone the use of FDA-approved generics saved consumer $158 billion, an average of $3 billion per week! How much money you save depends ultimately on your prescription plan, health insurance carrier and the particular drug involved. If you pay a flat fee co-pay, you might pay $5 to $15 for a generic drug and $15 to $40 for the brand-name drug. If you pay a co-pay based on the drug’s full cost (like a 30% co-pay), you would generally pay about 2/3 less for a generic than a brand-name drug. If you have no prescription plan or health insurance, the savings are about the same — approximately 2/3 cheaper and sometimes more.

Where can I get generic drugs?

Generic drugs are often overlooked because they are not advertised like brand-name drugs. Your doctor and/or pharmacist can guide you in the use of generic prescription drugs and let you know if there is a generic available for you in your particular situation. Some doctors may not know about the specific generics available, though; so it is always good to ask the question of the pharmacist as well. Depending on how the doctor writes the prescription — if he or she does not specify the specific brand-name medication — the pharmacist may be able to substitute the generic equivalent on his/her own.

Alliance for Affordable Services members can use the Mail Service Pharmacy benefit to save on prescriptions delivered right to their front door. The MEDPro benefit provides prescription assistance services to individuals and families in need of relief from paying retail costs for medications. And members can also save up to 65% on generic and brand-name prescription drugs with the Association RX Card
(part of the optional Health Superpack) at
over 60,000 pharmacies throughout the US. For more information, and to become an Alliance member, visit the Alliance Direct Benefits website today!

This website contains general information about medical conditions and treatments. The information is intended for reference only, not personalized advice, and should not be treated as such. For all medical conditions and decisions, please consult your physician or trained medical practitioner.

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