History of Generic Drugs
Generic drugs are nothing new. Back in the 1920s, the company that made Bayer aspirin fought vigorously to keep generic versions off the shelves. The company lost in court, and consumers suddenly had an array of choices in generic aspirin. Today, generic drugs are both widely available and carefully regulated.
This wasn't always the case. As recently as 40 years ago, drug companies could release new products with far less testing than is required today. The real test of a drug's safety and effectiveness came after it went to market. If too many patients had bad reactions, the drug could be pulled off the shelves. The danger of this approach became tragically clear when the sedative thalidomide caused thousands of devastating birth defects in Europe, Canada, Latin America, Africa, and Asia.
Those days effectively ended in 1962 when the Food and Drug Administration dramatically revamped the Federal Food, Drug, and Cosmetic Act, originally passed in 1938. It strengthened the drug testing laws already on the books, and for the first time, companies were required to prove that a drug was both safe and effective before it reached the market place. All new drugs had to go through a lengthy and expensive process that included large-scale human trials.
The new regulations applied to both brand name and generic drugs, a fact that slowed the release of new generics to a trickle. Any new generic drug had to go through the same investigational trials as any other drug, even if its active ingredients were identical to an already established brand name drug. Companies also had to wait for the brand name patent to expire before they could even do the testing require to produce a generic. Most companies didn't bother. By 1983, only 35 percent of the top-selling drugs with expired patents had a generic competitor, according to the Congressional Budget Office.
Today, the rate of competition is closer to 100 percent. Generic versions crop up almost immediately after the patent on a brand name drug expires. The floodgates opened in 1984 with the passage of the Drug Price Competition and Patent Term Restoration Act, commonly known as the Hatch-Waxman Act. The FDA calls it "one of the most successful pieces of legislation ever passed."
The new law made it much easier and cheaper to bring a new generic drug to market. Instead of going through lengthy human trials, companies merely had to prove that their drug had the same active ingredients and that they performed in the body the same way as the brand-name drug. The act also increased the amount of time a company could hold an exclusive patent on a new drug. Within a year, the FDA received more than 1,000 applications for new generic drugs, and an industry was born.
The act dramatically changed the face of medicine. Generic drugs now account for about 50 percent of all prescriptions, saving consumers $8 billion to $10 billion every year. We've come a long way since the time when generic aspirin first hit the shelves. And for consumers worried about the high cost of medications, that's a real relief.
U.S. Food and Drug Administration. Generic Drugs: Myths and Facts. July 2009.
Food and Drug Administration. Consumer Education: What You Should Know About Buying and Using Generic Drugs. July 2009.
Russell Mokhiber. The Tragic Children of Thalidomide. The Multinational Monitor. April 1987. Volume 8, Number 4.