Brand-name and Generic Product Equivalence

Saturday, September 8, 2018

In the world of managing claim costs, prescription medication costs can be the most challenging to tackle. Often times, sights are set on that time when that one Brand-name medication will finally go generic in the hopes of lower cost equivalents available on the market. Sometimes it happens and sometimes it fails.

But, did you know there is a lot that goes into the transition of a Brand-name medication to a generic equivalent suitable for market availability?

The Drug Price Competition and Patent Term Restoration Act of 1984 (also known as the Hatch-Waxman Act) allowed generic drug companies greater access to the prescription drug market.  According to the Food and Drug Administration (FDA), to be approved for marketing, a generic drug must: [1]

  • Be therapeutically equivalent to the innovator (brand) product;
  • Meet the same batch requirements for identity, strength, purity, and quality;
  • Be adequately labeled;
  • Be manufactured under the same strict standards of FDA’s good manufacturing practice regulations for the innovator product.

In order for a generic drug to be approved by the FDA, generic drug manufacturers are required to submit detailed results of testing to prove the generic is identical to its brand-name counterpart.  A generic drug costs on average 80-85% less than its brand equivalent.[2]  The generic drug is less expensive primarily because it avoids many of the start-up cost associated with the branded drug.  Costs such as: research and development; drug trials; and marketing and advertising. 

However, a generic drug must demonstrate pharmaceutical equivalence as well as bioequivalence to be considered therapeutically equivalent to a brand product.  According to the FDA, drug products are considered pharmaceutical equivalents if they contain the same active ingredient(s), are of the same dosage form and route of administration, and are identical in strength and concentration.3 Bioequivalent products are products with comparable bioavailability (rate and extent of absorption) when studied under similar conditions.[3]  The generic drug is also required to be manufactured under the same strict standards of the FDA’s good manufacturing practice regulations required of the innovator product. 

It is important to note that the FDA requires that the active ingredients be the same when comparing generic and branded drugs. However the inactive (filler) ingredients may be different.  In fact, oftentimes the company that makes a brand-name drug will trademark the appearance of the drug.  Therefore, by law, a generic drug cannot look exactly like the brand-name drug.  The generic drugs will often have a different color, size, shape, inactive ingredients, or flavor than the brand product.  In other words, a different appearance in the generic drug should be expected. 

A technical research note on Bioequivalence: One of the most common misconceptions as it relates to brand name and generic product equivalence has to do with understanding the concept of bioequivalence. According to the FDA, drugs are considered bioequivalent if the 90% confidence interval of the average or mean of the AUC (area under the time vs. concentration curve) and the average Cmax (maximum  concentration) of the test product is within 80% to 125% of the reference product.[4] To date, no clinical data have been submitted to FDA that would require the confidence interval to be smaller for any drug or class of drugs. If a tighter statistical interval was used to show bioequivalence, it is possible that a reformulated brand-name medication would not be equivalent to itself.4

The confidence interval range of 80% to 125% DOES NOT mean that drug levels can vary up to 20% between brand drugs and their generics.  This is a common misconception. The “20% rumor” originates from a lack of understanding of the statistical tests required to show bioequivalence. A generic drug must show that the 90% CONFIDENCE INTERVAL of the mean rate and extent of absorption is within 20% of the brand.  If drug levels vary by more than 10%, the range of possible values within the 90% confidence interval will likely become too broad and the drug will fail to establish bioequivalence with the reference drug. In reality, the bioavailability of most generic drugs differs from their brand-name counterpart by less than 4%.[5]

ExamWorks Clinical Solutions’ Doctors of Pharmacy closely monitor these transitions from Brand to generic. They are ready to assist you with your claim or Medicare Set-aside medication questions and strategies to improve claim and patient outcomes. If you have a case that needs assessment of the current medication regimen, please contact your local ExamWorks Clinical Solutions account executive or Nahla Rizkallah, PharmD at We can discuss current medication needs for your case, potential mitigation opportunities, and assist you in repositioning that case for settlement.


[1] Food and Drug Administration, Center for Drug Evaluation and Research: What are generic drugs? Accessed 8/8/2018

[2] Food and Drug Administration, Center for Drug Evaluation and Research.  Facts about generic drugs. September 19,2012. (accessed 8/6/2018).

[3] Approved drug products with therapeutic equivalents.  33rd Edition.  Federal Food and Drug Administration. 2013. (accessed 8/6/2018).

[4] Williams RL. Therapeutic equivalence of generic drugs: response to Nationa Association of Boards of Pharmacy. September 30,2016

[5] Center for Drug Evaluation of Resarch, U.S. Food and Drug Administration. Guidane for Industry. Statistical Approaches to establishing bioequivalence. January 2011. ComplianceRegulatoryInformation.pdf. Accessed 8/8/2018