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Sometimes vast amounts of time and money expended on research and development of a new drug, exclusive manufacturing patents are given to drug companies for new products. This allows the developing company a chance to be the only source for a new medical treatment for a number of years.

This time will vary. A patent in the United States is usually given for a twenty year period, but since this time begins counting down from the beginning of research, the effective market window can be years less. Once the originating company has had a chance to make back their investment, the patent expires so that other drug companies may also manufacture the drug under a generic label.

These generic drugs are supposedly the exact same chemical compound although a few variations are allowed so long as the counterpart generic can match the same bioequivalent effects of the original compound. Once these copycat drugs come on the market, the competition between them and the original product generally creates a price drop that can save the consumer and insurance companies a great deal of money while providing the same beneficial medicine.

There are two major reasons why generic drugs can be sold for a greatly lowered price than the original patented drugs. Firstly, the research and development stage is already been done so there is no great cost associated with their production. Also, with competition for the drug, regular market practices take over and the ability to choose between brands will usually keep the cost at a competitive level.

To a lesser degree, generic drug producers can also take advantage of the previous advertising by the original company that has familiarized people with the drug and will not have to get the idea of the product before the public view.

Once the exclusive patent expires on a drug there is almost no way to renew it. Patent laws vary from country to country and there are a few that do not recognize and accept the patents from the country of origin. Once a patent has expired it is available for duplication. An originating company cannot extend the patent by changing some of the formula as this is in effect making a new drug, however similar, and would have to go through the entire qualifying process again.

There is also the consideration that while a specific drug formula may be under patent, there can be other forms available provided the active ingredient is not patented. It then falls on the prescribing doctor to know which form of a certain chemical will have the desired effect on his patient.

There are regulatory tests to assure that the generic form of a drug is equivalent to the original although some small changes in the exact chemical elements are allowed provided the substituted ingredients are equally effective as the original. This is usually the case in some of the chemicals that help carry the active ingredient into the blood stream.

While these substitutes are tested to see that they perform equally, there is the bias among some doctors that only the original works the way they want and will disallow generic drugs to be filled by a pharmacy. There is no scientific rationale for this as the generic drugs have to pass the equivalence test before they can be released.