The Federal Drug Administration (FDA) does not allow a generic firm to duplicate exactly the brand name formula. The generic manufacturer must alter the ingredients slightly. This is accomplished by adding inert substances, substances that are inactive, to the generic alternative. Inert substances may function as disintegrates, binders, fillers, drying agents, lubricants, coatings, wetting agents, flavorings, coloring, or drying agents. Generic drugs are often up to 50 to 80 percent cheaper than their brand name counterpart and are gaining in popularity among cost-conscious consumers and their third-party payers.
Generic drugs enter into the retail prescription industry in a two-step process. The exclusive patent protection for the brand name product must expire. As a brand name product nears patent expiration, generic competitors apply for approval to the FDA using an Abbreviated New Drug Application (ANDA). Duplicating studies of the original brand name drug is no longer required by the FDA, and many generic companies contract with specialty laboratories to conduct the bioequivalency studies regarding absorption rates. Although the majority of products must meet bioequivalence standards, bronchodilators and topical drugs cannot be measured by absorption rates and are exempt. Injectables do not require biostudies, and oral liquids are reviewed on an individual basis. The drug must receive FDA approval following this rigid testing. The FDA also conducts periodic plant site inspections and surveillance of quality control procedures.