• Leadership and Structure
• Corporate Governance
• Public Policy
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  • Pricing and Value
    • Drug Spending and Utilization
    • Research and Development
    • Clinical Trials
    • Intellectual Property
    • Price Controls
    • Importation
    • Generics
      • Generic Competition
      • Hatch-Waxman Act
  • Health Care Reform
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• History
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Pfizer Public Policy: Generics

Generics are an important part of the health care system. Pfizer believes that when there is a direct generic equivalent to the prescribed brand name drug, it should be used provided the doctor agrees it is best for the patient.

Key Points

• Generic drugs offer a cost saving alternative to brand name drugs that are off-patent.
• Pfizer believes the intellectual property rights of innovator companies should be protected.

Generic drugs are copies of older drugs invented by innovator companies. Generic drugs become available after the patent(s) expire on the pioneer or original version of the drug. While the pioneer or original drug can be marketed only after extensive and costly tests are conducted to demonstrate safety and effectiveness (these are called clinical trials), generic drugs only need to show they are "bioequivalent" to the innovator product - meaning that they have virtually the same effect on humans - in order to be approved.

Because generic drugs need not be tested for safety and effectiveness - tests that cost millions of dollars - and because almost no money is spent inventing them, they generally can be sold for a lower price than the pioneer or original drug.

Innovator drugs do not have a lot of time alone on the market before generic drugs enter. Patents are issued for 20 years, but by the time pioneer drugs are approved by the FDA, usually at least half of that patent period has passed due to the length of time it takes to test and secure approval for the drug. Once a generic drug enters the market, the sales of the pioneer drug decline quickly and substantially, as shown in Chart 1.

In the past, it was not nearly as easy for a generic drug to enter the market. In 1984, Congress passed a law known as the Hatch-Waxman Act, which made it easier for generic drugs to be approved, and which sped up the generic drug approval process.¹

This reduction in generic entry barriers substantially increased both the proportion of brand-name drugs that were copied, and the share of generic products on the market. Since 1984 the generic drug industry has grown dramatically. More than half of all prescriptions are now filled with generic drugs, as shown in Chart 2.

Pfizer supports a balanced system that protects the patents of pioneering drugs while at the same time permits safe and effective generic drugs to be marketed after the patents expire. A balanced system assures that important medical investment will be protected throughout the life of a patent, while less expensive generics can become available when the patents expire.

Chart 1: Generic Entry Has Dramatic Impact on Brand-Name Sales

Chart 2: Hatch-Waxman Has Fueled a Highly Robust Generic Drug Industry

¹ PhRMA Annual Report 2006-07. http://www.phrma.org/profiles_%26_reports/. Accessed November 3, 2006.

² IMS. Update for 2006 and 2007 (FY 2006 and YTD April 2007).

In This Section

Generic Competition

Learn more about generic competition.

• Visit Generic Competition

Hatch-Waxman Act

Learn more about the Hatch-Waxman Act.

• Visit Hatch-Waxman Act

Last Updated September 2007

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