Why Most Drugs Don't Have Authorized Generics - And What It Means for Your Prescription Costs

Not every drug has an authorized generic - and that’s not an accident. It’s by design.

If you’ve ever picked up a prescription and seen a different-looking pill with the same name, you might have thought it was just another generic. But if it’s an authorized generic, it’s actually the exact same pill made by the brand-name company, just sold under a different label. No changes in ingredients. No changes in manufacturing. Just a lower price tag.

So why don’t all drugs have them? The answer isn’t about science or safety. It’s about money, strategy, and who controls the market.

What Exactly Is an Authorized Generic?

An authorized generic (AG) is a brand-name drug sold without the brand name on the label. It’s made by the same company, in the same factory, with the same formula, using the same equipment. The only difference? It’s sold as a generic - at generic prices.

Unlike traditional generics, which must prove they’re bioequivalent to the brand through costly and time-consuming FDA reviews, authorized generics skip all that. They’re produced under the original New Drug Application (NDA) the brand company already has. That means they can hit the market in weeks, not years.

For example, when Mylan launched its authorized generic version of the EpiPen in 2016, it wasn’t waiting for approval. It was just re-labeling the exact same auto-injector it already made for the brand version. The result? A 20% drop in price almost overnight.

Why Only Some Drugs Get Authorized Generics

Only about 1,215 authorized generics existed in the U.S. as of 2019 - out of thousands of prescription drugs. That’s less than 5% of all branded medications. Why so few?

Because AGs aren’t created to help patients. They’re created to protect profits.

Brand manufacturers use authorized generics as a tool - not to increase access, but to control competition. The most common scenario? When a generic company files to challenge a patent, the brand company can launch its own AG right away. That cuts the generic company’s profits before they even start.

The FDA gives the first generic applicant 180 days of exclusivity. During that time, they usually have no competition. But if the brand company launches an AG during those 180 days, suddenly there are two versions of the same drug on the shelf - one from the generic company, one from the brand. And guess who wins? The one with the lower price. Often, that’s the AG.

The Federal Trade Commission found that when an AG enters during exclusivity, the first generic’s revenue drops by 40-52%. That’s a massive hit. So many generic companies now avoid challenging patents at all - especially if they know the brand might launch an AG.

The Price Impact - And Who Really Benefits

Yes, authorized generics can lower prices. But not always - and not for long.

When Teva launched its AG version of Protonix in 2010, it priced it 35% below the brand. That helped patients. But here’s the catch: Teva owned both the brand and the AG. So they were essentially selling the same drug at two price points - and keeping all the profits.

For consumers, the savings during the 180-day exclusivity window are real. The FTC found retail prices dropped 4-8% and wholesale prices fell 7-14% when an AG was present. For a $100 prescription, that’s $4-$14 saved. Not nothing. But after the exclusivity period ends, prices often creep back up - especially if the AG is the only generic left.

And here’s the irony: patients often don’t even know they’re getting an AG. Pharmacists report confusion when a prescription switches from a brand to an AG - the pill looks identical, but the packaging is different. One study found 27% more prescription errors occurred when both versions were available.

Who Decides If an AG Gets Made?

No regulator. No law. Just the brand company.

There’s no requirement for a drug maker to launch an authorized generic. It’s purely a business decision. And it’s almost always tied to revenue.

According to Evaluate Pharma, 89% of drugmakers with annual sales over $1 billion have used AGs. Only 22% of companies with drugs under $100 million in sales have. Why? Because the bigger the drug, the bigger the risk of generic competition - and the bigger the incentive to control it.

Top-selling AGs are clustered in high-revenue areas: 42% are for brain and nervous system drugs (like antidepressants and ADHD meds), 28% for stomach and gut drugs (like acid reflux pills), and 19% for heart medications. These are the drugs people take for years - and pay for every month.

If a drug makes $500 million a year, the brand company has a strong reason to launch an AG to fend off competitors. If it makes $50 million? Not worth the hassle.

The Hidden Cost: Killing Generic Competition

Authorized generics don’t just compete with generics - they discourage them from ever entering the market.

Generic companies spend millions to challenge patents. They hire lawyers, run clinical studies, and wait years for approval. But if they know the brand company can launch an AG during their 180-day exclusivity window, their chances of making a profit drop dramatically.

One study found that when AGs are a possibility, generic companies need at least a 10% chance of winning a patent lawsuit to justify the cost. Without AGs, that number drops to just 4%. That’s a huge barrier.

Harvard’s Aaron Kesselheim put it plainly: AGs give patients short-term savings but hurt long-term competition. They turn the Hatch-Waxman Act - designed to boost generic access - into a tool for delaying it.

Even the FTC agrees. In 2023, they filed a legal brief arguing that AGs during exclusivity periods are “anti-competitive.” They’re pushing Congress to ban them during that window.

What’s Changing - And What’s Not

The FDA now updates its AG list quarterly instead of annually. That’s better transparency. But it doesn’t change who controls the system.

Legislation like the Preserve Access to Affordable Generics Act has been reintroduced in Congress multiple times. It would ban brand companies from launching AGs during the 180-day exclusivity period. So far, it’s stalled.

Meanwhile, drugmakers are getting smarter. Instead of launching AGs outright, they’re now including “no-AG” clauses in patent settlement deals. In 2022, 78% of these deals included promises not to launch an AG - up from 62% in 2013. That means the threat of an AG is being used as a bargaining chip - not to lower prices, but to buy silence.

And while biosimilars are growing, they’re mostly for injectable drugs - not pills. For the vast majority of medications you take daily, AGs are still the only alternative to brand-name pricing.

What This Means for You

If you’re paying for a brand-name drug, check if an authorized generic exists. Ask your pharmacist. Look up the drug on the FDA’s list. You might save a few dollars.

But don’t assume the system is working for you. The fact that only a small fraction of drugs have AGs - and only when it benefits the brand - tells you everything you need to know.

Generic competition should be about choice, not control. But right now, the people who make the drugs also decide who gets to compete. And that’s not how a free market should work.

Until laws change, the only way to know if your drug has an authorized generic is to ask. And even then, you’re relying on a company’s willingness to let you save money - not their obligation to let you.