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

If you create the drug you get a limited period of time of exclusive production before anyone can copy your drug most of the profit comes from this time, later people are so used to taking the named drug that they are reluctant to switch to a cheaper alternative with some believing that the original drug is superior to the generic version.