Manufacturing Generic Drugs in the US: What You Need to Know
Generic drugs play a critical role not only in the US pharmaceutical market but also in the lives of so many Americans every day. They offer savings, assure supply, and broaden access to lifesaving medications – today, nine out of every 10 prescriptions filled in the US are for generic medications, according to the FDA.
Although generic drugs work in the same way and provide the same clinical benefits as their branded counterparts, the ways generic and branded pharmaceutical manufacturers function are vastly different, and generic manufacturers must go through a specific approval process before entering the market to ensure their medications work the same as brand-name medicines.
Not all generics are manufactured in the US, however. A key differentiator for Westminster Pharmaceuticals is that nearly 90% of our products are manufactured here inside the United States. Many generic pharmaceutical manufacturers offshore the production of the medications due to cost savings, but we choose US manufacturing, despite it leading to smaller profit margins for us. We take pride in keeping the majority of our products here in the US – from manufacturing to distribution to dispersion.
Here’s what you need to know about the manufacturing and approval process for generic drugs in the United States:
The Critical Role of Generics
Generics make up about 89% of all the prescriptions filled each year in the US and are an essential component of our healthcare system. Generic prescriptions are far more affordable to fill, with 90% of generics costing under $20 as compared to the 39% of branded copays in the commercial markets that fall under that price.
Yet, generics only account for about 26% of total drug costs in the US. Branded drugs, on the other hand, make up 74% of our country’s total drug costs.
Generics aren’t only more affordable and accessible to patients who rely on these medications, but they also help patients follow through with their treatment. Overall, the abandonment rates (rates of patients calling in a prescription but not getting it filled) of generic drugs are nearly three times lower than the abandonment rates of branded drugs, due in part to sticker shock from the higher branded prices.
Generic Drug Qualifications
All generics that are available in the US marketplace must meet the same stringent qualifications and requirements set forth by the Food and Drug Administration.
As compared to its branded counterpart, a US generic medication must:
Perform the same in the body
Last for the same amount of time
Meet the same high quality and manufacturing standards
Use the same active ingredients
Have the same risks and benefits
Have the same dosage
Have the same form and route of administration
Have the same labeling
Have the same effectiveness
Have the same safety
Have the same strength
Aspects of the generic manufactured medications that may slightly differ from the branded versions include:
Inactive ingredients
Visual appearance (colors, flavoring, etc.)
Cost
Generic drugs must be manufactured to have the same performance and quality as brand-name drugs, which requires American generic manufacturers to invest in research and development as well as facilities, equipment, facility maintenance, and ongoing FDA compliance.
Branded vs. Generic Manufacturers
Generic manufacturers function very differently than brand-name manufacturers. Most of the revenue of generic pharmaceuticals is captured by the players and steps of the supply chain, while in the branded pharmaceuticals supply chain, the manufacturer retains most of the revenue made.
A US branded manufacturer’s financial motivators starkly contrast those of the generic manufacturer – they know that when they create a new, needed medication, they are going to receive a huge payoff of around 76% of revenue produced. The longer they hold onto the patent for the pharmaceutical, the more they can control access to and cost of the medication.
American generic manufacturers, on the other hand, don’t have direct control over the cost of the medication, and they don’t gain the same financial benefits as branded manufacturers in the US. In the generic pharmaceuticals supply chain, the supply chain captures about 64% of all revenue, with most of the money going to pharmacies, insurers, wholesalers, and pharmacy benefits managers.
Manufacturing and Approval Process
Once manufactured to meet the FDA’s strict qualifications and before they enter the marketplace, any US generic medication must go through the same approval process.
Initiated by the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, a manufacturer must only demonstrate that its pharmaceutical does not significantly differ from its reference product (branded version). The Hatch-Waxman Act created the Abbreviated New Drug Application (ANDA) as a way to begin the generic drug approval process. There are four types of ANDA certifications a US pharmaceutical manufacturer may use to submit an ANDA with respect to the patents held by the innovator (branded) product:
Paragraph I: The branded product manufacturer hasn’t filed for a patent
Paragraph II: The branded product’s patent is expired
Paragraph III: The branded product’s patent will expire in the future
Paragraph IV: The patent is invalid or will not be infringed upon by the development and sale of the generic
The FDA typically spends around 17 months reviewing applications before giving their final decision. During this review process, the generic manufacturer, as well as the generic medication, is vetted for quality and performance using the qualification requirements listed previously.
Depending on the paragraph the application is filed under, the FDA may be able to immediately approve the request, or may approve it for future use. The first company that successfully applies to sell a generic version of a branded drug is granted 180 days of market exclusivity.
US Generic Drug Manufacturing: The Bottom Line
In summary, the manufacturing of generic drugs is incredibly important to the American healthcare system. US generic drug manufacturing creates products that are just as effective as branded counterparts and is a more altruistic industry than branded manufacturing, since, to the benefit of the American consumer, most of the revenue is captured throughout the supply chain rather than by the manufacturer.
The nature of the generic pharmaceuticals market also lends itself well to more competition, ultimately driving prices lower and keeping more money in patients’ pockets.
As a US generic pharmaceuticals manufacturer, Westminster Pharmaceuticals aims to provide timely access to high-quality medications at affordable costs by distributing generic drugs to pharmacies, hospitals, and trusted wholesalers and distributors across the country. With the best interests of American patients in mind, we strive to create supply chain efficiencies and pass on our competitive advantages to all of our manufacturing, wholesale or distribution, and pharmacy partners.
To learn more about what we offer or become a partner today, reach out to our team.