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FAQ about Generics

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What is an original brand?

This is the first patented brand of a medicine. The patent allows a company to recover the cost of the medicine’s Research and Development (R&D) by allowing it to sell the medicine exclusively for a set number of years. The original brand is priced to cover the cost of the R&D as well as the actual manufacturing cost, leaving a slight margin as profit for the company.

What is a generic brand?

This is the bio-equivalent version of an original (patented) medicine. When the patent life on a medicine ends, other companies can produce the same medicine for sale. In Australia, the new generic version must be tested and shown to be bioequivalent to the original, meaning it must have the same effects on the body. The price of the generic alternative is usually lower, as there are no R&D costs to be recovered.

Why should I request a generic medicine?

As Australians, we all benefit when generic alternatives are supplied in preference to the original brand. Here are some reasons why:

  • It supports the Government’s initiative to save millions to the Pharmaceutical Benefits Scheme (PBS)

    The competition created by the supply of generic alternatives lowers the market price of medicines. The savings amount to millions of dollars every year for the PBS. The more people request the generic the more the price will come down.

  • The savings fund the listing of new medicines on the PBS

    We all want the ability to access new and more effective medicines. Each new medicine adds a cost to the PBS. Savings from the supply of generic alternatives release funds to enable the Government to subsidise the latest therapies.

  • It helps keep the patient co-payments low

    Australians pay a maximum of AU$ 36.90* (general patients) or AU$ 6.00 (concession patients) per medicine, usually considerably less than the full price shown on the pharmacy label. The Government subsidises the difference. With the rise in medicine consumption due to our ageing population and the high cost of new medicines, savings from generics keep the PBS affordable and can stop us from having to pay more.

  • It supports the funding of important pharmacy services

    Competitive terms available on generics also help pharmacies to provide customer services that are important to the community, often free of charge. Pharmacy advice is one such service. If you want to support your community pharmacy, ask for the pharmacy’s preferred generic.

  • It provides the opportunity to take home savings

    Generic competition reduces prices both immediately and on an on-going basis. When the price falls below the patient co-payment, savings will be made directly by you.

    *Co-payments effective January 1 2014, does not include Brand Price Premium

If generic medicines save costs why don’t they cost me less?

Australians pay a maximum co-payment of AU$ 36.90* (general patients) or AU$ 6.00 (concession patients) per medicine, which is usually considerably less than the full price shown on the pharmacy label. The Government pays the difference. As the price of the medicine decreases with generic competition, the Government’s share of the cost is immediately reduced. As consumers, we pay less when the actual medicine price falls below our co-payment amount. Sometimes the original brand costs more than the generic medicine. This can happen when the manufacturer of the original brand chooses to sell the product at a price that is more than the Government’s set price. In this instance, the pharmacist will pass this extra cost to the consumer. This extra cost is called a Brand Price Premium (BPP).

*Co-payments effective January 1 2014, does not include Brand Price Premium

What you should know when switching to a generic medicine:
  • Know the active ingredient and avoid double dosing:

    Medicines usually have two names, the brand name, which is given by the manufacturer, and the active ingredient name. The active ingredient is the chemical in the medicine that makes it work and will be the same across all bioequivalent brands. It is important to be clear what the active ingredient is in your medicine to avoid double dosing with an alternative brand of the same medicine.

  • Alternative brands have the same quality:

    All medicines sold in Australia, including generic medicines, must meet the same strict quality and safety standards.

  • Alternative brands are just as safe and effective:

    Alternative brands are bioequivalent, meaning that the medicines are tested and accepted to have the same effects on the body.

  • You should continue to take the generic medicine in the same way as before:

    Your generic alternative will come in the same strength and should be taken at the same time and in the same way as before.

  • What could be different:

    Generic medicines contain the same active ingredient as the original brand, but may taste, smell or appear different (e.g. it may be of a different colour, shape or size). This would be due to different inactive ingredients being used such as lactose, gluten, sugar, preservatives or dyes.

  • Check the inactive ingredients if you have allergies:

    If you avoid certain substances because of particular allergies, intolerances or cultural beliefs, you should check the Consumer Medicine Information (CMI) when you change brands. There may be some differences in the inactive ingredients compared to the original brand. Ingredients such as lactose, gluten, gelatin and any colouring agents will be listed.