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Drug companies are creating generics to compete with their own products

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Photo: Phil Ashley/Getty Images

Drug companies are increasingly trying to maximize their profits by creating generics to compete with their own brand-name products, Kaiser Health News reports.

Why it matters: "Authorized generics" can be just as profitable, if not more profitable, than the branded drug. They also can stifle competition from other generics, leading to higher prices for patients.

By the numbers: There are almost 1,200 authorized generics in the U.S., according to the FDA. Last year, there was about one new authorized generic a week.

  • For every $1 invested into an authorized generic, there's a return of $51, according to research firm Cutting Edge Information.

What they're saying: A spokesperson for PhRMA told KHN that authorized generics increase competition, which "reduces prices and results in significant cost savings."

The other side: They can “stave off generic competition and make sure that generics can’t get much of a foothold when they do get to market,” Robin Feldman, a professor at the University of California Hastings College of the Law, told KHN.

  • And because authorized generics often aren't subject to rebates, their net price could end up being higher than the net price of the original branded drug.

Go deeper: Reality check on Lilly's new, cheaper insulin