The wealth of a nation is said to depend on the health of its citizens. Health is the prime importance to the happiness of a man. According to the National Health Accounts (NHA), Indians’ out-of- pocket (OOP) expenditure on healthcare, which is the money individuals pay on their own rather than being covered by insurance or health benefits, has been estimated to be around Rs. 2.9 lakh Cr. or 69 per cent of total health expenditure in the country. This is alarmingly high and India stands among the highest in this regard worldwide. It is mentioned in the report that half of all the household money that is spent on healthcare—around Rs. 1.5 lakh crore —goes to pharmacies. This includes chemists, community and independent pharmacies. Health care costs continue to rise in India. Therefore, consumers, providers and policymakers need to assess the best way to keep health care affordable without adversely affecting access to quality care. With prescription drug (branded drug) costs serving as a major contributor to cost escalations, generic drugs offer an important tool for reducing the rate of growth in overall health expenditure.
Generic medicines are unbranded medicines, which are equally safe, and having the same efficacy as that of branded medicines in terms of their therapeutic value. It is also defined as a drug marketed under its chemical name without advertising. There are two concepts to be understood here, one is generic vs. patented drugs and the other is a drug's “brand name” vs. “non-proprietary name” or “generic name.” Non-proprietary name is the name for the active ingredient in the medicine that is decided by an expert committee and is understood internationally (WHO, 2013a). Thus, paracetamol/acetaminophen is the non-proprietary name (generic name) while Crocin/Metacin/Meftal/Tylenol etc. are brand names.
Generic drugs play an important role in health care and the availability of generic drugs reduces the monopoly and oligopoly powers of the patent holder. It is seen that many countries do not have the technological capability for manufacturing and supplying generic drugs even if the laws of those countries permit them to do so.
It is a known fact in India that people are influenced by the “brand name” of a product, be it clothes, cosmetics, accessories, including grocery, durables or medicines. In the case of the medicines market, the brand names are more popular. Certain names of medicines have a powerful impact on people’s minds that both the medicine and the brand have become synonymous. For the over-the- counter (OTC) drugs, majority of people are aware of the brand names rather than their chemical or generic names.
In India most of the companies manufacture Generic drugs with Brand name. These are popularly known as Branded generics. The same company is manufacturing the medicines under brand name with the same composition with heavy publicity/promotion /Advt.,. Due to this, there is a huge gap between the ex-factory price and MRP between Branded Generics and branded Medicines and it varies as much as from 30 to 80 percent.
It’s a well-known fact that due to market lead consumer awareness and availability, branded medicines are sold by drug manufactures at higher prices than their unbranded generic equivalence, which are equally good in therapeutic values. It is also a fact that there are no separate standards for generic and branded drugs. As per the drugs and cosmetics act, every drug has to pass specified parameters. In developed countries like U.S.A most of the prescriptions are in generic names.