When getting a prescription filled at the pharmacy you may be asked if you want a generic version of the medicine - and maybe you're wondering if getting the cheaper, generic drug is like getting an inferior home-brand product in the supermarket. Are generic drugs as effective and safe as their more expensive branded counterparts?

In short, the answer is yes - when it comes to the active ingredient, generic drugs are exactly the same.

What are generic drugs?

A generic drug is a copy of a branded drug. It is chemically equivalent to its branded counterpart but usually costs less. Generic drugs must meet the same standards of quality, safety and efficacy as branded drugs.

Some generic drugs may look different to their branded equivalent because they may have different inactive ingredients, also known as excipients, but the active ingredient used is exactly the same, with the same dosage as the branded version.

Why so cheap?

Not all drugs have a generic equivalent. That's because newly developed medicines are protected by a patent - typically for 20 to 25 years. This means the original brand manufacturer has the sole right to sell the drug during that time. This allows the company to recoup the money it invested in research and development, marketing, promotion and brand creation.

When patents come close to expiry, other manufacturers can apply to the government's Therapeutic Goods Administration (TGA) for the right to sell competing generic drugs. Generic drug manufacturers don't have to match the investment of companies developing new drugs and so can pass on their reduced costs in the form of lower prices for consumers.

The majority of consumers and patients can safely and conveniently substitute generic drugs for branded medications, saving a lot of money in the process.

Are they safe?

In terms of safety, both generic and brand-name drug facilities must meet the same standards of manufacturing practices. Interestingly, many manufacturers of branded drugs also make generic drugs, copying other companies' and even their own branded drugs.

Generic medicines may contain different inactive substances, such as fillers. Depending on the inactive substance, they may not be safe for people who are allergic to a particular inactive substance, such as gluten, lactose or preservatives.

Adverse reactions to inactive substances are extremely rare, however, people with severe allergies need to check all medicines carefully before starting use by reading a Consumer Medicine Information (CMI) leaflet or talking to their doctor or pharmacist. This problem is not confined to generic medicines; original medicines also contain inactive substances which potentially may cause an allergic reaction. Just don't assume that because the original medication didn't set off your allergies, the generic one won't cause an adverse reaction.

Save money on generic medicines

For those drugs not listed on the Pharmaceutical Benefits Scheme (PBS) there are no subsidies, so you'll have to pay the full price of a more expensive brand if you choose it over the generic version.

Of those medicines that are listed on the PBS, the government only subsidises up to the price of the cheapest version of any particular medication (usually a generic). This means you may have to pay extra for more expensive brands. When we looked at the issue in 2008, we found that consumers could save up to nearly $12 on certain prescription drugs listed on the PBS. Given that the maximum consumers can pay for a PBS-listed drug is $36.90, that's a hefty saving.

The 'brand premium' you pay on more expensive medicines won't count towards meeting the government safety net. Under the safety net, if you're a general patient your prescription costs will reduce to the concessional rate of $6 once you or your family have spent $1421.20 on medication in a calendar year. If you are a concession card holder, your prescriptions are free once you or your family has spent $360 on medicines in a calendar year.

Tips to save money on medicines

  • When your doctor prescribes a drug, ask whether there is a less expensive brand that might be suitable for your condition.
  • Ask your pharmacist to substitute a cheaper brand if possible. The pharmacist can do this, unless the doctor has marked the prescription 'no substitution'.
  • If you need a lot of medicines you should keep good records. This will help you keep track of your medications and also help you to work out when you reach the safety net. Your pharmacist can give you a Prescription Record Form that they will fill in each time you get a prescription.
  • You can find out more about generic medications by phoning the Medicines Line on 1300 888 763 or by visiting the National Prescribing Service.