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Brand Name vs. Generic Drugs: What's the Difference?

Tylenol vs. Acetaminophen, Tecta vs. Pantoprazole, Lipitor vs. Atorvastatin….What’s the difference?

You may have heard of the terms “brand name” and “generic” in regards to your medications. A common misconception is that brand name drugs are better than generics. In fact, one of the most frequent questions we get at the pharmacy is, “Are they really the same?” The truth is, there are only 2 major differences between these products: the drug development process and the price.

When a company wishes to develop a brand new drug, they can apply to obtain a 20-year patent which gives that company the sole right to produce and sell that drug. These are the “brand name” drugs made by innovator companies such as Pfizer, Bayer, GSK, and Eli Lilly. During this time, no other company is allowed to sell that particular drug. These innovator companies pour billions of dollars into the new drug development process which includes drug discovery, research and development, safety reviews, animal testing, several human clinical trials, and submissions for approval. This whole process typically takes 10 to 15 years, though it may be shorter or longer depending on the nature of the drug and the types of studies being conducted. This leaves about 5 to 10 years for the company to exclusively sell the drug on the market while the patent is still in effect.

Once this patent expires, generic companies such as Apotex, Sandoz, and Teva are free to make a copy of the brand name product and bring it to the market. The generic drugs are named after the chemical makeup (which is why they can sometimes be difficult to pronounce!). This product must be either identical or bioequivalent to the brand name drug in terms of dosage form, safety, strength, route of administration, quality, performance characteristics, and intended use. The only difference in the formulation of the product would be the excipients or “fillers” which are the inactive non-medical ingredients that make up the rest of the product. This is why they may look slightly different in size, shape, or colour compared to the brand name, but it is really only important if one has an allergy to one of the excipients.

Since the innovator company has already done all the drug discovery and research into identifying an effective active pharmaceutical compound, the generic companies do not have to go through the same process, cutting their development time and costs substantially. This allows them to sell their products for much cheaper than brand name drugs. For example, the price of 1 tablet of Atorvastatin 10 mg is just 10% of the cost of the brand name, Lipitor 10 mg.

Generic companies must, however, demonstrate that their drug product is bioequivalent (ie. has the same rate and extent of absorption in the body) as the brand name drug through a bioequivalency study, where results must fall within a range of 80-125%. This may sound like a large range, but any differences within this range are clinically insignificant. This proves that the generic drug will have the same therapeutic effect as the brand name.

Once the generic drug is fully developed, an abbreviated new drug application must be submitted to Health Canada for approval. In order to be approved, the generic drug must meet the following criteria:

  • Contain the same active pharmaceutical ingredients as the innovator drug

  • Be identical in strength, dosage form, and route of administration

  • Have the same use/indication(s)

  • Be bioequivalent​

  • Meet the same requirements for identity, strength, purity, and quality​ within each batch

  • Be manufactured under the same strict standards of Health Canada’s good manufacturing practice regulations required for innovator products​

Now, when it comes to drug coverage, the Ontario Drug Benefit (ODB) program as well as most third-party insurance providers will only cover the cost of the generic drug rather than the brand name (with some exceptions) due to the fact that they are therapeutically equivalent and more affordable. In addition, pharmacies must provide the patient with the lowest cost interchangeable product (ie. product with the same or similar active ingredient) listed in the ODB formulary unless specifically requested by the physician or patient. For example, if a doctor writes you a prescription for Lipitor (brand name), the pharmacist will dispense Atorvastatin (generic). This is why the drug you receive at the pharmacy may have a different name than the drug written on the prescription.

So, while generic companies provide us with effective drugs at an affordable price, they wouldn’t exist without the brand name. That being said, we can see how both brand and generic products have an important place in this world.

Click here to view our infographic!

When given the option between a brand name and generic drug, which would you choose? Let us know your thoughts in the comments below.

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  1. Access to generic drugs in Canada. Government of Canada. Updated December 10, 2018. Accessed November 29, 2020.

  2. Foldvari, M. Introduction to pharmaceutics. Presented as part of Pharmacy 124; January 7, 2019; Waterloo, ON.

  3. Generic drugs: Questions & answers. US Food & Drug Administration. Updated June 1, 2018. Accessed November 29, 2020.

  4. Similarities and differences between brand name and generic drugs. Canadian Agency for Drugs and Technologies in Health. Updated July 17, 2015. Accessed November 29, 2020.

  5. What is the approval process for generic drugs? US Food & Drug Administration. Updated August 31, 2017. Accessed November 29, 2020.

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