The facts about generic and biosimilar medicines
Generic medicines are expert copies of medicines made by companies that didn’t develop the original drug themselves.
Although a generic medicine costs less, it will still work as well as the more expensive medicine. All generic medicines have to be approved by Medsafe and go through bioequivalence testing to make sure that they work the same way as the original brand of that medicine.
Patents and generics?
When a pharmaceutical company first develops a medicine, it takes out a patent to make sure it has the exclusive right to produce and market the medicine with a particular active ingredient. The active ingredient is the chemical in the medicine that makes the medicine work. These original medicines are often marketed under the pharmaceutical company’s trade-marked name or brand name and can be called the ‘originator brand’ or the ‘branded’ medicine.
When the patent for the medicine expires, other manufacturers can also make the medicine with the same active ingredient. These are generic medicines.
Some branded products are made using a patented production process, rather than a patented active ingredient. In such cases, generic products can be made but must use different production processes that do not infringe the patent.
Do generic medicines work the same as brand-name medicines?
Yes. Generic medicines have to be ‘bioequivalent’. This means that they have to have the same active ingredient, and that ingredient has to be delivered to the body in the same way and have the same effect on the body as the original medicine. They don’t have to be manufactured using the same process.
Are generic medicines safe?
Yes. Medsafe, a unit of the Ministry of Health that regulates medicines used in New Zealand, makes sure that all medicines available in New Zealand go through the same quality, efficacy and safety checks before they can become available. Because generic medicines have to have the same active ingredient in them as the original medicine, they have the same risks and benefits as the original brand medicines.
In most cases PHARMAC funds generic medicines that Medsafe has assessed as being safe, effective and of good quality. PHARMAC gets advice from clinical advisory committees before it considers tendering for a generic medicine.
For more information about the tender process, see the information sheet Medicine and medical devices contract negotiation.
Why do generic medicines sometimes look different if they have the same active ingredients?
In all medicines there are both active and inactive ingredients. The inactive ingredients in the medicine are called excipients. These inactive ingredients hold the medicine together, give the medicine its colour or make it easier to swallow. Generic medicines can look different because their inactive ingredients may be different to the inactive ingredients in the original medicine.
Sometimes people can be allergic to excipients, both in brand name and generic medicines. If you are allergic to something it is important to check what your medicine contains, regardless of whether you are taking a branded or a generic medicine.
Why are generic medicines less expensive?
It often costs pharmaceutical companies a lot of money to develop and market a new medicine, and these costs are then passed on to the people who buy the medicines. The company that makes the original medicine takes out a patent so they are the only ones who can make this medicine, or make it using a particular process. This helps the company recover some of the costs associated with developing and marketing their new medicine.
Companies making generics do not have to make the medicine from scratch or pay for the research (in most cases), develop the medicine or carry out the same range of clinical trials that the original medicine has to go through. That means it costs less for them to put the medicine on the market.
Generic medicines are also cheaper because of competition. When different makers of a medicine are competing against each other prices come down.
Do generic medicines take longer to work in the body?
No. Because they have the same active ingredient and are delivered to the body in the same manner, generic medicines work in the same way and in the same amount of time as the original brand medicine.
Where are generic medicines produced?
Generic medicines are produced in factories all over the world. These factories must be approved by international regulators, including Medsafe, before they can provide medicines to New Zealand. Often, the factories that produce generic medicines are also producing the active ingredient for brand name medicines.
It doesn’t matter where in the world the factory producing the generic medicine is, the approval process and the standards for the medicines are the same.
Generic medicines are often produced by major pharmaceutical companies that also develop original brand name medicines.
Many brand name medicine companies are now buying or going into partnership with generic medicines companies to expand the range of products they produce and broaden their revenue base.
What are biologic medicines and how do they differ from other medicines?
Biologics include products like vaccines, insulin to treat diabetes, hormones such as human growth hormone, and many modern medicines used to treat cancer, arthritis and other auto-immune disorders.
Unlike most traditional medicines that are made through chemical processes, biologic products are made of, or from, living things like yeasts, bacteria or animal cells. They usually have a more complex structure than other medicines.
Biologics are growing in importance and taking on a greater share of health spending. There are many biologics in the development pipeline so this trend will only increase. Biologics already account for a significant and growing proportion of New Zealand’s expenditure on medicines. In 2014/15 net expenditure on biologics used in the community was around $215 million, approximately a quarter of the total Combined Pharmaceutical Budget.
The largest and fastest growing segment of biologics expenditure in New Zealand is on monoclonal antibodies. Together in 2014 they accounted for less than 1 percent of prescriptions funded, but approximately 10 percent of total NZ medicines expenditure. Biologic medicines are typically patented medicines or production processes.
What are biosimilars?
Because of the inherent variability of biologic medicines, it is impossible to make exact copies. For this reason, competitor products of biologic medicines aren’t called ‘generics’, they are known as ‘biosimilars’.
A biosimilar is a highly similar, comparable version of an approved biologic medicine. Any differences between the biosimilar and its reference medicine will have been shown not to affect the quality, safety or efficacy of the medicine.
The high cost of some biologic medicines means that they are often not affordable for patients or funders. Biosimilars offer considerable potential for PHARMAC to increase competition, reduce costs, and improve access for patients to these important medicines.
Biosimilars are used extensively overseas. Countries with a high acceptance of biosimilars include Austria, Germany, Greece, and Sweden. Australia and New Zealand regulators have also approved biosimilar medicines for use.
Early examples of PHARMAC utilising biosimilars to create competition for biologics include filgrastim (2012), somatropin, a type of growth hormone (2014), and infliximab (Remicade), a treatment for auto-immune disorders (2014).
Last updated: 2 May 2017