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Stop wasting money on brand-name drugs

drug spending

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Drug costs are soaring, and one of the biggest cost drivers is prescription brand-name drugs. Sometimes, there's no alternative  on the market to treat a particular illness. But other times, Americans opt for branded medicines when cheaper, generic versions are available.

On average, generics cost 80 to 85 percent less than name-brand medicines, according to the Food and Drug Administration (FDA). And buying unbranded drugs isn't like opting for cheap toilet paper or no-name face cream: Less expensive here doesn't necessarily mean lower quality.

In order to bring costs down, at both the population and individual level, many experts have encouraged a switch to generic drugs wherever possible. Here's what you need to know.

What's the difference between generic and brand-name drugs?

After FDA approval, brand-name medicines enjoy a period of monopoly through patent protection, which means they can generally demand higher prices. When that exclusivity period is over, generic drugmakers can enter the market.

These drugs are drastically cheaper than their brand-name counterparts mainly because generic drugmakers piggyback on all the research and development that was done by the original drugmaker. So generic manufacturers don't bear the same R&D costs. They also don't spend much on marketing — a massive cost for Big Pharma.

Six tablets of the the brand-name antibiotic Zithromax cost $150  — while the same amount of the generic version (azithromycin) costs about $10.

Generics are also chemically identical to name-brand drugs, which means that medically speaking, they're likely to work just as well. With a few exceptions I'll mention below, it's usually smart to buy generic versions of drugs whenever they are available.

Are generics really as safe and effective as brand-name drugs?

Overall, yes. According to FDA regulation, generic drugs need to have the exact same active ingredients as branded medicines. They also need to come in a similar form (pill, injection, etc.). And generic drugmakers have to prove that their products are bioequivalent, meaning they produce the same amount of active ingredient in a person’s bloodstream compared with the branded medication.

The existing body of high-quality evidence suggests that generic drugs consistently meet these requirements. So there's generally little downside to switching to generics. The only difference (in most cases) is that they’re less of a burden on the wallet.

When the FDA looked at more than 2,000 human studies conducted between 1996 and 2007 comparing how people's bodies absorbed brand-name versus generic drugs, they found the average difference in absorption was about 3.5 percent — the same variation you'd expect from any two batches of drugs. (In fact, the FDA noted studies comparing batches of brand-name drugs to each other found about the same variation.)

Another massive study in JAMA focused on drugs that are used to treat cardiovascular disease — one of the largest areas of drug spending. The researchers looked at studies published between 1984 and 2008 that compared the health outcomes of generic and brand-name drugs. They found the two types of drugs fared almost identically but that people seem to have a bias against generics anyway.

Interestingly, medical journal editorials on the drugs told a slightly different story: "Whereas evidence does not support the notion that brand-name drugs used in cardiovascular disease are superior to generic drugs, a substantial number of editorials counsel against the interchangeability of generic drugs," the JAMA researchers wrote.

Are there any exceptions?

There are. For one, generic drugs contain the same active ingredients as brand-name drugs — but they can contain slightly different inactive ingredients. These are things like binding materials, dyes, preservatives, and flavors.

In theory, these differences could somehow cause an allergic reaction or gastrointestinal distress. Steve Morgan, a University of British Columbia health care spending researcher who has studied generics, explained that this means that, while generics perform about the same for the overwhelming majority of people, there will be individual exceptions. "How [these differences] might affect different people, it's not possible to know in advance," he added. He said he'd always recommend that people try the generic version and switch back if they notice any problematic changes.

Another area where the experts urge extra caution: drugs with what's called a "narrow therapeutic index," or NTI. Examples include anticoagulants, immunosuppressants, and antiarrhythmic and antihypertensive medicines. With these drugs, there are only tiny differences between the doses that make them beneficial and the doses that make them toxic. Any slight variation could make a difference for a patient.

"There is less data on NTI drugs than there are on non-NTI drugs, so it probably makes sense to be more cautious in those instances — especially with patients who are high risk for one reason or another, or who have had sensitivities to other medicines," said Aaron Kesselheim, a professor of medicine at Harvard Medical School. He suggests that doctors closely follow up with patients to look for any changes in reaction.

Kesselheim also noted that branded drugs can cause problems for some: There's good evidence people are less likely to follow their prescriptions when their drugs cost too much. In these cases, people might be better off on more affordable generics.

So all these factors should be taken into account when making a decision about what drug to use.

Make sure to price-shop for your generics

First things first: Ask your doctor whether there's a generic version of your medication available. If you decide to make the switch, be sure you compare prices.

There can be pretty big variations in the cost of generic drugs at different pharmacies. Consumer Reports recently did an investigation of price variation by calling hundreds of pharmacies across the US and asking about the prices of five popular drugs that had recently become available in generic versions. They found that drugs could cost as much as 10 times more at some pharmacies compared with others — even in the very same cities.

In general, big chain pharmacies like Rite Aid and CVS charged the most, while Costco offered competitive prices (you don't need to be a member to use its pharmacies). Some independent pharmacies sold generics very cheaply — though with a lot of variation among them.

Online retailers such, as HealthWarehouse.com, also offered very competitive prices, and sites like GoodRx.com can give you a sense of the price landscape.

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