Why Not All Drugs Have Authorized Generics - And What It Means for Your Prescription Costs

When you pick up a prescription, you might assume the generic version is just as good as the brand name - and usually, it is. But here’s something most people don’t know: not all drugs have authorized generics. Even when a brand-name drug loses patent protection, there’s no guarantee you’ll get a cheaper version that’s made by the same company using the exact same formula. That’s because authorized generics aren’t a legal requirement - they’re a business decision.

What Exactly Is an Authorized Generic?

An authorized generic is the exact same drug as the brand-name version, down to the pill color, inactive ingredients, and manufacturing process. The only difference? It’s sold without the brand name on the label. It’s made by the original drug company - not a separate generic manufacturer - and sold at a lower price. Think of it like a company selling the same coffee under two labels: one with a fancy logo, and one with a plain white bag. Same beans, same roast, different price tag.

Unlike traditional generics, which must prove they’re bioequivalent to the brand through testing (a process that can take years), authorized generics skip all that. They’re produced under the original New Drug Application (NDA), so they enter the market instantly. That’s why some authorized generics hit shelves within weeks of a patent expiring - or even before.

Why Do Some Drugs Have Them and Others Don’t?

The short answer: money. Brand-name drugmakers only launch authorized generics when it makes financial sense. If a drug brings in over $500 million a year, it’s likely to get an authorized generic. Why? Because the company wants to control the market. If a rival generic company gets the first shot at selling a cheaper version, they can lock in 180 days of exclusive sales. That’s worth hundreds of millions. To prevent that, the brand company might launch its own generic version - an authorized generic - right away.

Take Mylan’s EpiPen. In 2016, Mylan launched an authorized generic while the brand was still under patent. The price dropped nearly 50%. It wasn’t charity - it was strategy. By doing this, Mylan kept control of the market and blocked competitors from gaining a foothold. The same thing happened with Pfizer’s Lyrica and Teva’s Protonix. In each case, the authorized generic wasn’t about helping patients - it was about protecting profits.

But for smaller drugs? Drugs that make less than $100 million a year? Almost never. There’s no financial incentive to launch an authorized generic. So if you’re taking a lower-cost medication - say, a generic blood pressure pill made by a small company - you’re unlikely to ever see an authorized version. The brand company just doesn’t care enough to bother.

Authorized Generics vs. Traditional Generics: The Real Difference

Many people think all generics are the same. They’re not.

Traditional generics are made by separate companies. They have to go through the FDA’s Abbreviated New Drug Application (ANDA) process. That means they need to prove they work the same way as the brand. It takes 3 to 4 years on average. The result? A cheaper drug, but one that might come from a different factory, with different fillers, and sometimes even different pill shapes.

Authorized generics? Same factory. Same equipment. Same batch records. Same quality control. Just a different label. That’s why pharmacists report confusion - patients get the same pill in two different boxes. One says “Lipitor,” the other says “atorvastatin.” But they’re identical. That’s not a mistake. That’s by design.

The FTC found that when an authorized generic enters the market during the 180-day exclusivity window, it slashes the first generic’s revenue by 40% to 52%. That’s not just competition - it’s a preemptive strike.

Who Benefits? And Who Gets Left Behind?

At first glance, authorized generics look like a win for patients. Prices drop. Savings? The FTC says 4% to 8% at retail, 7% to 14% at wholesale. AARP found patients saved an average of $18.75 per prescription when an authorized generic was available.

But here’s the catch: those savings are temporary. Once the 180-day exclusivity period ends, the authorized generic often disappears. The brand company pulls it off the market to make room for the traditional generic. Or worse - they never launch one at all. So patients get a short-term price break, then go back to paying full price for the brand.

And for the drugs that never get an authorized generic? Patients get nothing. No price drop. No competition. Just the brand, still at full cost. That’s the case for dozens of high-cost drugs each year - especially those with complex formulations, like inhalers, injectables, or biologics.

The Hidden Cost: Stifling Real Generic Competition

Authorized generics don’t just lower prices - they kill incentives. Why would a small generic company spend $5 million and wait four years to challenge a patent if the brand company can just launch its own version and crush their profits before they even start?

Harvard researcher Aaron Kesselheim found that the presence of an authorized generic reduces the chance a generic company will even file a patent challenge. Without the threat of competition, brand companies can extend their monopoly longer than intended.

The FTC calls this a “deterrent effect.” In their 2011 report, they showed that when an authorized generic is expected, a generic company needs a 10% chance of winning a patent lawsuit to justify the cost. Without it, they’d only need a 4% chance. That’s a massive barrier.

And it’s not theoretical. In 2016, after Mylan launched its EpiPen authorized generic, competitor Perrigo filed an FTC complaint accusing Mylan of anti-competitive behavior. The FTC agreed - but didn’t stop the practice.

What’s Changing? And What’s Not

The FDA now updates its list of authorized generics quarterly instead of annually - a small improvement after years of criticism. But the core problem remains: the system is built on the goodwill of brand companies. There’s no law forcing them to make authorized generics. No requirement to disclose when they’ll launch one. No penalty for withholding them.

Congress has tried. Bills like the Preserve Access to Affordable Generics Act have been introduced multiple times since 2003. In 2023, a new version had 43 bipartisan cosponsors. But so far, nothing’s passed. The drug industry spends millions lobbying against it.

Meanwhile, reverse payment settlements - where brand companies pay generic makers to delay their entry - are now more common than ever. In 78% of these deals from 2018 to 2022, the brand company promised not to launch an authorized generic. That’s not competition. That’s collusion.

What You Can Do

You can’t force a drugmaker to launch an authorized generic. But you can be smarter about your prescriptions.

Ask your pharmacist: “Is there an authorized generic for this?” If they say yes, ask if they can switch you to it. It’s often cheaper than the traditional generic.

Check the FDA’s list of authorized generics. It’s not perfect, but it’s the only official source. Look up your drug by brand name - if it’s listed, you might have a better option.

If you’re on Medicare Part D, compare your plan’s formulary. Some plans cover authorized generics at lower tiers than traditional generics.

And if you’re paying out of pocket? Always ask for the lowest-cost version - even if it’s the brand. Sometimes, the brand is on sale. Sometimes, the authorized generic isn’t stocked. Sometimes, the traditional generic is more expensive than the brand. It’s messy. But you have more power than you think.

Bottom Line

Authorized generics aren’t the hero they’re sometimes painted to be. They’re a tool - used by big pharma to control the market, not to lower prices for good. They help some patients in the short term. But they also block real competition, delay true generics, and leave most drugs untouched.

If you want real, lasting savings, you need more than authorized generics. You need policies that force real competition. Until then, the availability of these drugs will always be random - determined not by patient need, but by corporate strategy.