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November 14, 1986

Cost and Price of Comparable Branded and Generic Pharmaceuticals

Author Affiliations

From the Leonard Davis Institute of Health Economics, University of Pennsylvania, Philadelphia (Drs Bloom and Pauly); and Pennsylvania Blue Shield, Camp Hill, Pa (Mr Wierz). Mr Wierz is now with MEDCO Group, Fair Lawn, NJ

JAMA. 1986;256(18):2523-2530. doi:10.1001/jama.1986.03380180085024

Substituting generic for brand drugs has been increasing for two decades with the expectation that it leads to important savings. We studied 891 862 prescriptions, written for 21 pairs of branded and generic drugs, dispensed between April 1, 1984, and June 30, 1984, by 1363 selected pharmacies in 39 states. The cost per pill paid by the pharmacy was always less for the generic than the branded drug. The price per pill paid by the consumer was usually less for the generic than the brand. The wide and skewed distribution of consumer prices within and among pharmacies means that consumers cannot be guaranteed the lowest cost simply by buying generic drugs. The probability that generic would be less expensive than brand varied widely across drug pairs from.33 to.99. Continued search is no guarantee that the full distribution of prices or the lowest or nearly-lowest price will be found.

(JAMA 1986;256:2523-2530)