Eli5 – How do name brand drugs turn a profit?

Question

Might sound like a loaded question, but hear me out.

In the Good ol’ USA, generic drugs are required by the FDA to have the exact same make up as the name brand drug (ie. Benadryl vs generic Diphenhydramine). I’d imagine this is also a requirement in other countries.

So how exactly do those companies turn a profit when a generic version of their drug can swoop in and undercut them?

In: 0

Answer 1

Perceived trust and familiarity. Many people, consciously or not, perceive the “real” version as being better or in some other way more worthy of trust.