Ten Myths about the Market for Prescription Drugs
Myth No. 3: Americans Spend Too Much on Highly Advertised Brand-Name Drugs Instead of Purchasing Less-Expensive, Generic Drugs
Due in large part to "The Drug Price Competition and Patent Term Restoration Act of 1984" (Hatch-Waxman Act), which allowed generic drug companies to start manufacturing products before brand-name drug patents expired and to simply show that their copies of drugs were "equivalent" to a brand-name drug without conducting their own safety and effectiveness studies, the generic drug industry is a rapidly growing competitive force.
"Some predict that 70 percent of U.S. prescriptions will be filled by generic drugs in 2000."
Although generic drugs are supposed to be identical to the brand-name drugs they replace, doctors and patients find that the effects are not always uniform. While generics are generally acceptable, they are older technology and thus are not as clinically effective as newer medicines, particularly in the treatment of heart disease, depression and brain disorders. Still, as Table I shows, the market share of generic drugs more than doubled in little more than a decade - from 18.6 percent in 1984 to 41.6 percent by 1996. According to some predictions, in the year 2000 about 70 percent of U.S. prescriptions will be filled by generic drugs. The generic drug industry is expected to grow dramatically as the new century begins, as more than 200 drugs (with $22 billion in 1996 sales) lose patent protection.