When you pick up a prescription, you might see two bottles on the counter that look exactly the same. One says Authorized Generic and costs $20. The other says the brand name and costs $50. You might wonder - if they’re identical, why the big price difference?
They’re the exact same drug, just a different label
Authorized generics aren’t knockoffs. They’re not cheaper because they’re lower quality. They’re made in the same factory, with the same ingredients, by the same company that makes the brand-name version. The FDA requires them to meet the same strict standards. That means the active ingredient, the fillers, the coating, even the shape of the pill - everything is identical. The only difference? The label.Think of it like buying a Coca-Cola bottle from the factory warehouse without the logo. It’s still Coca-Cola. Same recipe. Same bottling line. Just sold under a different name.
Why do brand companies allow this?
It sounds strange. Why would a company that spent millions developing a drug let someone else sell it for half the price? The answer lies in the 1984 Hatch-Waxman Act. This law gave the first generic manufacturer 180 days of exclusive rights to sell a generic version after a patent expires. That’s a big deal. During those six months, they have no competition. They can set high prices - sometimes close to the brand price - and make huge profits.Brand companies don’t want to lose all their customers to that single generic. So they launch their own authorized generic. Right away. On day one.
Now there are two versions of the generic on the market: one from the first generic company, and one from the brand company itself. Suddenly, the first generic can’t charge $45 for a pill that’s now also being sold for $20. They have to drop their price to compete. And they do.
Studies from the Federal Trade Commission show that when an authorized generic enters the market, retail prices drop 4% to 8% compared to when there’s no authorized generic. For pharmacies buying in bulk, the discount is even bigger - up to 14% lower wholesale prices. That’s not a small savings. That’s money back in patients’ pockets.
How much do they actually save you?
The numbers are clear. Authorized generics typically cost 4% to 8% less than the brand-name version. But here’s the catch: that’s not always what you pay at the pharmacy.Pharmacy Benefit Managers (PBMs) - the middlemen between insurers, pharmacies, and drug makers - decide which drugs go on which tier in your plan. Sometimes, they put the authorized generic on the same tier as the brand. That means your copay is the same whether you get the brand or the generic. You’re not saving anything.
But if the PBM puts the authorized generic on the lowest-cost tier - the same as regular generics - you could pay as little as $5 or $10 for a 30-day supply. That’s a massive drop from $80 or more for the brand.
Real-world data from Truveris tracked 1.2 million Medicare Part D patients. When authorized generics were placed on the lowest tier, medication adherence jumped by 8.2 percentage points. People filled their prescriptions more often. Why? Because they could afford them.
Real examples: EpiPen and Harvoni
In 2016, Mylan raised the price of the EpiPen from $100 to $600. Public outrage exploded. So they released an authorized generic - same device, same epinephrine - for $300. It wasn’t cheap, but it was half the price. And it forced other companies to lower their prices too.Gilead did something similar with Harvoni and Epclusa, drugs used to cure hepatitis C. Before their patents expired, Gilead launched authorized generics. Why? Because they knew cheaper generics were coming. By launching their own, they kept some control over the market and kept patients from switching to competitors.
In both cases, the authorized generic didn’t just save money - it changed how the whole market reacted.
Why aren’t they always cheaper at the pharmacy?
This is where things get messy. PBMs don’t always pass savings on to you. Some use a system called Maximum Allowable Cost (MAC), which sets the highest price a pharmacy can be paid for a drug. If the MAC for an authorized generic is set too high, the pharmacy might not even stock it - even if it’s cheaper for you.Thirty-two states now require PBMs to explain how they set these prices and let pharmacies appeal unfair rates. But it’s still a patchwork. You might save $40 on a drug in one state, and $5 in another - all because of how the PBM structures its list.
How to make sure you get the savings
If your doctor prescribes a brand-name drug, ask if there’s an authorized generic available. It’s not always obvious on the label. Ask your pharmacist: “Is there an authorized generic for this?”Check your insurance formulary. Log into your plan’s website. Look for the drug name and see if an “authorized generic” is listed. If it’s on a lower tier, choose that one.
Some pharmacies will automatically substitute an authorized generic if it’s cheaper - but not all. Don’t assume. Ask.
And if your plan doesn’t cover it, ask your doctor to write a note saying the brand isn’t medically necessary. Sometimes, that’s enough to get coverage for the generic.
Are authorized generics here to stay?
Yes. About 67% of brand-name drugmakers have used authorized generics for at least one drug since 2010. The U.S. generic drug market is worth $60 billion - and authorized generics make up about 12% of that.With the Inflation Reduction Act capping out-of-pocket drug costs for Medicare beneficiaries at $2,000 a year, savings matter more than ever. Authorized generics help patients stay on their meds. They help insurers control costs. And they force the entire market to stay competitive.
They’re not a perfect solution. Some critics argue they’re used to delay real competition - like when a brand company strikes a deal with a generic maker to delay entry. But the data shows: when an authorized generic is present, prices drop faster and stay lower.
Bottom line: authorized generics are a real way to save money on prescriptions. They’re not magic. They’re not a loophole. They’re just the same drug - sold without the brand name. And if you know how to find them, you can save hundreds a year.
Are authorized generics as safe as brand-name drugs?
Yes. Authorized generics are made in the same facility, with the same ingredients, and under the same quality controls as the brand-name drug. The FDA requires them to be identical in strength, dosage, safety, and effectiveness. The only difference is the label.
Why isn’t the authorized generic always cheaper at my pharmacy?
Your pharmacy benefit manager (PBM) decides which drugs go on which tier in your plan. Sometimes, they place the authorized generic on the same tier as the brand, so your copay doesn’t change. Ask your pharmacist if the generic is on a lower tier - or request that your doctor specify "dispense as written" if you want the brand.
How do I know if my drug has an authorized generic?
Check the FDA’s quarterly list of authorized generics, or ask your pharmacist directly. Many drug manufacturers also list authorized generics on their websites. If your prescription is for a drug that’s been off-patent for a year or more, there’s a good chance an authorized generic exists.
Do authorized generics work as fast as brand-name drugs?
Yes. Because they’re identical in formulation and absorption, authorized generics work in the same amount of time as the brand. There’s no delay in effectiveness. Your body can’t tell the difference.
Can I switch from a brand to an authorized generic without side effects?
Absolutely. Since the active ingredient and delivery system are identical, switching won’t cause new side effects. Millions of patients switch to authorized generics every year without issue. If you’ve had no problems with the brand, you won’t have problems with the authorized generic.