All About Generics
The manufacturer of a brand-name medication gets a patent for their drug early in development, before FDA approval, to prevent other companies from developing their drug. The life of a drug patent is 20 years. The brand-name company gets those 20 years to develop and market the drug before other companies can produce and market a generic version.
Typically, about half of the patent life is lost during drug development, leaving the brand-name company with 10 years, give or take, to market their product exclusively. In the event that less time is needed for drug development, the brand-name company is limited to 14 years of market exclusivity. If the FDA takes a long time to approve the drug, the company may be given extra patent time to make up for the time lost waiting for the FDA.
Often, the brand-name company has many patents for their product. They might have a patent for the drug, a patent for the indication (or use), a patent for the method of delivery (say, a new type of injection), and the list goes on. There are also some other complicated circumstances and legal situations that change patent life or market exclusivity. Together, these things make it difficult to predict when a generic will be available, but typically, you can expect that a generic will be available no more than 14 years after the brand-name product is approved.
Once the patents on a brand-name medication expire, any manufacturer can develop and market a generic version. Prices for generic medications may start out expensive, but usually decline fairly quickly.
Sometimes, however, a generic manufacturer challenges the patents on a brand-name medication before the patents expire. It is not easy to challenge the patents on a brand-name medication, and it can turn into a legal battle, but there is incentive for generic manufacturers to do this. The first company to successfully challenge these patents has the right to be the only generic on the market for 180 days.
When this occurs, there is no competition from other generic manufacturers, so the first generic available often costs nearly as much as the brand-name product. After 180 days, other manufacturers can market generic versions of brand-name medications. This competition between drug manufacturers is what really reduces medication costs.