Abstract

Most new drugs are protected by pharmaceutical patents, which give the patent holder exclusive control over that drug’s supply for 20 years. When the patent term expires, the drug becomes available for generic production by any company. The resulting competition typically leads to dramatic reductions in price. In Brazil, generic drugs are on average 40% cheaper than reference or brand-name drugs. In the United States, the Federal Drug Administration reports up to 85% price differences. Consumers in India have witnessed more than 100-fold price reduction for antiretroviral drugs due to generic production. Generics thus play a key role in broadening access to health care, mostly by driving costs down, both in the developing and developed world.