A generic drug (generic drugs, short: generics) is a drug which is produced and distributed without patent protection. The generic drug may still have a patent on the formulation but not on the active ingredient.

A generic must contain the same active ingredients as the original formulation. According to the U.S. Food and Drug Administration (FDA), generic drugs are identical or bioequivalent to the brand name counterpart with respect to pharmacokinetic and pharmacodynamic properties. By extension, therefore, generics are identical in dose, strength, route of administration, safety, efficacy, and intended use.

Health professionals and consumers can be assured that FDA approved generic drugs have met the same rigid standards as the innovator drug. To gain FDA approval, a generic drug must:

• contain the same active ingredients as the innovator drug(inactive ingredients may vary)
• be identical in strength, dosage form, and route of administration
• have the same use indications
• be bioequivalent
• meet the same batch requirements for identity, strength, purity, and quality
• be manufactured under the same strict standards of FDA's good manufacturing practice regulations required for innovator products

In most cases, generic products are available once the patent protections afforded to the original developer have expired. When generic products become available, the market competition often leads to substantially lower prices for both the original brand name product and the generic forms. The time it takes a generic drug to appear on the market varies. In the US, drug patents give twenty years of protection, but they are applied for before clinical trials begin, so the effective life of a drug patent tends to be between seven and twelve years.

Why are generic drugs cheaper than brand name drugs?

Although generic drugs are chemically identical to their branded counterparts, they are typically sold at substantial discounts from the branded price. According to the Congressional Budget Office, generic drugs save consumers an estimated $8 to $10 billion a year at retail pharmacies.  Even more billions are saved when hospitals use generics.

Buying generic drugs online can save patients and insurance companies substantial costs, without compromising the quality of care. The principal reason for the relatively low price of generic medicines is that competition increases among producers when drugs no longer are protected by patents. The price of the generic product decreases as the rate of production increases. Companies also incur fewer costs in creating the generic drug, and are therefore able to maintain profitability while offering the drug at a lower cost to consumers. The costs of these generic drugs are so low that many developing countries can easily afford them.

Generic manufacturers do not incur the cost of drug discovery, and instead are able to reverse-engineer known drug compounds to allow them to manufacture bioequivalent versions. Generic manufacturers also do not bear the burden of proving the safety and efficacy of the drugs through clinical trials, since these trials have already been conducted by the brand name company.