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What's the Difference Between Generic, Brand-Name and Biosimilar Drugs?

More than 90 percent of prescription drugs filled in the United States are generic drugs, according to IQVIA, a healthcare data analytics company. But are they the same as brand-name medications?

What is a Brand-Name Drug?

A brand-name drug is a medication sold by a pharmaceutical company under a specific name or trademark.

Rigorously reviewed by the U.S. Food and Drug Administration (FDA), brand-name drugs are protected by a patent, which prevents other companies from making and selling the same drug. This process is designed to allow a drug company time to recoup the money it spent researching, developing, monitoring, and marketing the drug. When a patent or marketing-exclusivity agreement expires—or if a generic drug company legally challenges a patent or agreement between the drugmaker and the FDA—a generic version of the drug can be developed.

Not all brand-name drugs have a generic counterpart and not every patient is a candidate for a generic equivalent.

What is a Generic Drug?

A generic drug is a medication manufactured to be the same as a brand-name drug in dosage, safety, effectiveness, strength, stability, quality and form.

Generics offer the same benefits and risks as a brand-name drug because they use the same active ingredients and are made to work the same way. That means it is bioequivalent to the brand-name drug. While there may be some differences between the two versions, such as color or flavor, most research studies have found little difference in quality or effectiveness.

To meet the FDA standard of interchangeability, a drugmaker must prove that the generic could be expected to produce the same clinical result as the brand-name product. Additionally, for drugs taken or administered more than once, the drugmaker must demonstrate that the risks involved in switching between a generic and brand-name equivalent don’t exceed the risks of continuing with the original drug. It’s also important to note that a pharmacist can substitute a generic for a name brand without notifying you, your doctor or healthcare provider.

Because generics aren’t subject to clinical trials, and don’t require investment in research and development, they are typically cheaper than their brand-name equivalents. The FDA investigates any complaints filed about generic drugs and may issue a recall if a medication doesn’t measure up.

What is a Biosimilar Drug?

A biological or biologic drug is one developed from natural or living materials, such as animal or plant cells, bacteria, yeast, micro-organisms, tissues, proteins or sugars. A biosimilar drug is a medication developed to be comparable to a biologic (often called the reference product).

Much like generic drugs, biosimilar drugs are rigorously reviewed by the FDA and are required to be created with the same ingredients, provide the same benefits, and have the same form, strength, and dosage as the related biologic. Also, like generic drugs, biosimilar drugs often cost less than the original version while delivering the same clinical benefits and risks.

However, while a generic drug is chemically identical and therefore an interchangeable substitute for its brand-name version, due to the natural variability in biological and natural materials, manufacturing an exact copy of a biologic is impossible. Because of that variability, a biosimilar drug may have a different structure than the original, but the active ingredient(s) will be the same. Those natural variables can also make it more difficult to manufacture biosimilar versions of a drug as inexpensively as a standard generic. So, while the cost is often lower, it’s not as low or as locked in for the consumer.

The same FDA standards for interchangeability that apply to generic drugs also apply to biosimilar drugs.


Tom Culman is a senior research assistant at RA Capital in Boston.