An analysis of the factors affecting the production of generic drugs

Topics: Generic drug, Food and Drug Administration, Pharmaceutical industry Pages: 5 (1515 words) Published: October 8, 2013
An analysis of the factors affecting the production of generic drugs

Generic drugs are the replicas of original drugs. These can be divided into two categories, authorized and unauthorized. Authorized generic drugs are the medicines which comply with the international code, Trade-Related aspects of Intellectual Property Rights (TRIPS), while the drugs which infringe the patents of brand-name drugs and do not comply with this code are regarded as unauthorized generic drugs. Recent publications by scholars (Ryan, 2009; Kaplan et al., 2012; Gonzalez et al., 2008; Grabowski et al., 2011) have discussed the advantages and disadvantages of manufacturing authorized and unauthorized generic drugs. This issue is controversial because it involves the interests of a wide range of stakeholders, such as pharmaceutical companies, governments and the general public. Although there are numerous factors involved, opinions on the situation can be divided into four general areas, political, economic, health-related and technological. Those who support manufacture of generic drugs, such as Ford et al. (2007, cited in Kaplan,2012 , p.215) and Gonzalez et al.(2008), primarily agree with the potential benefits of alleviating the monopoly of branded remedies in the market and providing alternative medicines with lower prices. Those who support the opposite view, however, like Ryan (2009), point out the possible consequences of triggering diplomatic conflicts and a lower incentive of investments in the pharmaceutical development. The purpose of this essay, therefore, is to examine the pros and cons of manufacturing generic drugs from these four aspects, taking a supportive stance on the manufacture of authorized generic drugs and a stance against the production of unauthorized generic drugs.

Sell (1995, 1988, cited in Ryan, 2009, p.1083) notices the favorable policies of developing countries for the production of unauthorized generic drugs. Ryan (1995, cited in Ryan, 2009, p.1083) notes that the manufacture of these drugs will trigger diplomatic conflicts due to the violation of TRIPS. Moreira (1990 cited in Ryan, 2009, p.1083) expands on the impacts of these conflicts with a reference to the subsequent revenges which were launched by the US government such as economic sanctions for the goods from Brazil because of their favorable position for producing unauthorized generic remedies. He presents a strong justification for this negative political consequence (Moreira, 1990, cited in Ryan, 2009, p.1083).

The economic impacts of producing generic medicines can be divided into two categories, microeconomic and macroeconomic. From the microeconomic perspective, scholars, like Kaplan et al. (2012) and Gonzalez et al.(2008), support Grabowski et al.’s (2011) claim that the sale of both authorized and unauthorized generic medicines will decrease the market occupancy of brand-name drugs. Gonzalez et al. (2008) and Grabowski et al. (2011) attribute this phenomenon to the markdown of the generic remedies. Kaplan et al. (2012) emphasize that manufacturing these medicines can alleviate the problem of a monopoly of branded drugs. However, scholars diverge on the importance of the advent of these generic remedies which leads to a lower market share of brand-name drugs. Gonzalez et al. (2008) argue that the main reason is the switch of physicians’ choices from using original branded medicines to the other branded medicines in the same category, while Grabowski et al. (2011) contend that the lower price of the generic drugs is the main cause.

From the macroeconomic perspective, Teece (2000, cited in Ryan 2009, p.1084) implies that the sale of unauthorized generic remedies will undermine the ‘competitive advantage’ of a country. He points out that the elements for turning ‘intangible assets’, including pharmaceutical knowledge, into predominant industries are the patent laws for curbing the production of unauthorized generic medicines (Teece,...

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