Many consumers choose brand-name drugs over their cheaper generic counterparts because they're convinced that pricier products are superior. Well, they are often just throwing their money away. Find out why generics cost less.

Thanks to the power of advertising, we have a brand-name bias in this country that prompts us to buy highly-publicized items ranging from sneakers to canned peas to medications. Sometimes well-known brands are superior to their lesser-known counterparts. But not always. Not, for example, when it comes to generic drugs. After all, no agency imposes quality standards on sneakers or peas the way the Food and Drug Administration (FDA) does on generic medicine.

In addition to considering the quality of products on the market, you probably also consider the expense. It's one thing to refuse to spend an astronomical price for those sneakers or peas. It's quite another thing to jeopardize your health because you can't afford the sky-high prices of brand-name medications you need to get well. Unfortunately, many people don't realize that generic alternatives--costing 25 percent to 80 percent less--may be available.

Why is it that a brand-name drug and an equally effective generic alternative differ so much in price? Before a drug appears on the market, a pharmaceutical company spends millions of dollars on research and development. Then once the drug is approved by the FDA, it spends millions more on promotion and advertising. To recover some of this money, the company gets a patent and an exclusivity agreement, allowing it to be the sole manufacturer of their "brand-name" drug for a certain number of years. Only after the patent and exclusivity time expire, can another company produce a bioequivalent--or generic version--of the same medication. These knock-offs cost consumers so much less because the companies that produce them don't have to dole out millions for development and promotion.

Companies that produce generics benefit from all the initial effort that goes into creating original, brand-name drugs. You, in turn, can rely upon the quality of generics. "In approving a generic drug product, the FDA requires many rigorous tests and procedures to assure that the generic drug is interchangeable with the brand-name drug under all approved indications and conditions for use," says Stuart L. Nightingale, M.D., FDA Associate Commissioner for Health Affairs.

For generic drugs to be deemed equally effective to brand-name drugs by the FDA, they must be:

1. Pharmaceutically equivalent. A generic drug must have the same active ingredients, dosage form (e.g., tablet or capsule), strength, and route of administration (e.g., oral or IV) as its brand-name twin.
2. Bioequivalent. To pass muster in this area, a generic drug must act on the body in the same manner and to the same degree as the original brand-name drug. One measure of this condition is how readily the generic enters the bloodstream and becomes available to the body.
3. Approved as safe and effective. A generic drug meets this requirement by showing that it is a copy of the original, FDA-approved drug.
4. Manufactured in compliance with Current Good Manufacturing Practice regulations. All drug manufacturers--generic and brand-name--must meet the same high production standards. The FDA inspects drug manufacturers to ensure that their products are safe and that their efficacy will not vary. Areas reviewed include the company's manufacturing procedures, raw material specifications and controls, and sterilization procedures.
5. Adequately labeled. Generic drugs must have the same patient information inserts as the original drugs they replicate.

According to the FDA, a therapeutically equivalent generic may differ in certain characteristics from the brand-name drug, including shape, release mechanisms, packaging, excipients (colors, flavors, preservatives), expiration date/time and minor aspects of labeling. When such differences are important in the care of a particular patient, a physician may choose a particular brand-name product rather than a generic. But in the vast majority of cases, there is rarely a problem switching to the generic version of most drugs.

If you are currently taking any prescription medications, ask your doctor or pharmacist if there are generic alternatives. The switch could help you save.