The Generic Prescription

When you buy generic drugs, then you have save your pocket in healthcare respectively. This isn’t a secret anymore, generic drugs and branded name drugs have such a huge difference in their price, and even they have the same effect on your body.

Our question now, why with the same ingredients that almost identical (differ only in the inactive ingredient) and moreover with the same effect, resulting huge gap in their selling price. The answer is pharmaceutical companies which produce branded name prescription drugs have these 3 cost components, which is: Advertising, Research & Development and Corporate Pressure.

The first component, advertising done by pharmaceutical companies spent tons of money. They use various medias like newspapers, magazines and TV and classified ads to billboard on the streets. Also for you who have hobby online its familiar to see companies like Pfizer and Eli Lilly put their ads there. Its stated that in 2002 alone, pharmaceutical companies spent $2.3 billion on ads. They promote their products everywhere so everybody knows about them. Names like Viagra (Men’s Health), Lipitor (Cholestrol) and Zyban (Quit Smoking) finally became household and have been your life too.

The second component is research and development. For sure pharmaceutical companies who bring brand name prescription drugs invent that drugs themselves. This will require a lot of research and development program that very costly and time consuming. Beside, research that have been done is very complicated and required study to prove the safety and effectiveness of the drugs. So its not surprising if all of the R&D elements need a huge cost.

The third component is company pressure. From business side, many pharmaceutical companies are publicly traded companies that listing in the Wall Street stock exchanges. They need a lot of profit as an incentive for the investor to buy their stocks. With high profit margin, will come high dividend as well, although do not always happen, this also boost the drugs production cost.