How Brand Manufacturers Produce Their Own Generic Versions

When a brand-name drug loses its patent, prices usually drop by 80% or more. That’s the rule. But what happens when the company that made the brand-name drug also starts selling the generic version? It’s not a trick. It’s called an authorized generic, and it’s one of the most strategic moves in pharmaceuticals today.

What Exactly Is an Authorized Generic?

An authorized generic is the exact same pill, capsule, or injection as the brand-name drug-same active ingredient, same inactive ingredients, same size, same color, same manufacturing process. The only difference? The label. It doesn’t say Pfizer, Eli Lilly, or AstraZeneca. It says something like "Omeprazole 20 mg" and carries the name of a subsidiary or distributor.

The FDA requires this. Trademark law stops a company from selling the exact same packaging as the brand. So they change the label, the box, maybe the imprint code on the pill. But inside? Identical. That’s why patients often can’t tell the difference-even if they’ve been taking the brand for years.

The first big case happened in 1997 when AstraZeneca launched an authorized generic of Prilosec (omeprazole) the day its patent expired. Within six months, they captured 30% of the entire omeprazole market. That’s not luck. That’s strategy.

Why Do Brand Companies Do This?

Think about it: when a patent expires, dozens of companies rush in to make cheaper versions. Prices crash. Revenue plummets. In some cases, a drug that made $1 billion a year drops to $100 million in 12 months.

Instead of watching their profits disappear, brand manufacturers play defense. They launch their own generic version. Now they’re not just competing against others-they’re one of the others. And because they already know how to make the drug, they can get it to market faster than anyone else.

The FDA says it takes traditional generic manufacturers an average of 17 months to get approval. Brand companies? They can launch an authorized generic in 6 to 9 months. Why? Because they already have all the data. They’ve already passed every inspection. Their facility is already FDA-approved. They don’t need to start from scratch.

This also lets them skip the 180-day exclusivity period that’s given to the first traditional generic applicant. That means they can launch on day one-right alongside the competition. In 2019, Teva did this with Copaxone. On the exact day the patent expired, their authorized generic hit shelves. They captured 22% of the market in the first quarter.

How Is It Made?

The production line doesn’t change. Same factory. Same machines. Same workers. The same batch of active pharmaceutical ingredient (API) that went into the brand-name drug now gets repackaged under a different label.

The only real work is administrative:

• File an Abbreviated New Drug Application (ANDA) under a subsidiary name
• Update labeling to remove brand names and logos
• Set up a separate sales team to avoid mixing marketing channels
• Coordinate with distributors and pharmacies to ensure the generic is stocked

It’s not about reformulating. It’s about rebranding-legally.

A 2023 case study from U.S. Pharmacist found that switching a single product to an authorized generic costs between $15 million and $25 million. That’s a lot. But the return? On average, companies recoup that investment in just 14 months. Why? Because they keep control of the market.

What’s the Impact on Prices?

Here’s where it gets complicated.

On paper, authorized generics are cheaper than the brand. Usually 10% to 15% lower. But they’re still 5% to 10% more expensive than the traditional generics made by other companies.

That creates a strange pricing tier:

• Brand: $120/month
• Authorized generic: $105/month
• Traditional generic: $30/month

So who buys the authorized generic? People who don’t know the difference. Or those who trust the original brand. A 2023 Kaiser Family Foundation survey found 71% of patients preferred authorized generics when available-because they felt safer with the same pill they’d always taken. But 64% didn’t even realize it was made by the same company.

Meanwhile, independent pharmacists report confusion. Patients walk in asking for the "generic" and get handed the authorized version, thinking they’re saving money. But they’re paying $75 more than the real generic.

And the data backs this up. Dr. Aaron Kesselheim from Harvard found that markets with authorized generics saw only a 32% price drop. Markets with only traditional generics? 68% drop. That’s a huge difference.

Is This Fair?

The Federal Trade Commission (FTC) thinks not.

Between 2015 and 2020, the FTC sued several companies for using authorized generics as a way to block real competition. In 2017, they won a $448 million settlement against Actavis over Namenda, arguing the company introduced its own generic to scare off other manufacturers.

The argument? If you’re the only company that can make the drug, and you’re the one launching the "generic," you’re not creating competition-you’re controlling it.

PhRMA, the big drug industry group, disagrees. They say authorized generics increase access and maintain quality. They point to FDA data showing 99.7% bioequivalence between brand and authorized generic drugs.

The Congressional Budget Office estimates authorized generics save $2.3 billion a year in drug spending. Sounds good. But they also say that’s only 37% of what could be saved if traditional generics had a fair shot.

Who Benefits?

The brand manufacturers? Definitely. They protect their revenue. They keep their factories running. They avoid layoffs. They maintain control over distribution.

Pharmacies and insurers? Sometimes. Authorized generics are easier to stock. They don’t have to retrain staff. They know the product. But they don’t get the deepest discounts.

Patients? It depends. If you care about price, you lose. If you care about consistency, you win. Many patients report fewer side effects with authorized generics compared to traditional ones-even though they’re supposed to be identical. Why? Maybe it’s placebo. Maybe it’s real. Either way, the perception matters.

The Bigger Picture

Between 2023 and 2027, $250 billion worth of brand-name drugs will lose patent protection. That’s a tsunami of expirations.

The top five pharma companies-Pfizer, Johnson & Johnson, Roche, Merck, AbbVie-launched 47 authorized generics between 2020 and 2023. That’s a 28% increase year over year.

And it’s spreading beyond pills. In 2023, Johnson & Johnson launched the first authorized generic of a long-acting injectable drug, Invega Sustenna. That’s huge. Injectables are harder to copy. Manufacturing them requires specialized equipment. Fewer companies can do it.

Now, the first authorized biosimilar is here. Amgen launched its own version of Enbrel in 2023. That’s a biologic-a complex protein-based drug. If they can make an authorized biosimilar, what’s next?

Analysts predict that by 2025, 40% of small-molecule drugs losing patents will have authorized generics. That’s not a trend. That’s the new normal.

What Should You Know as a Patient?

If you’re on a brand-name drug and it goes generic:

• Ask your pharmacist: "Is this the authorized version?"
• Check the label. If it has the same name as your brand, it’s probably authorized.
• Compare prices. The real generic is often half the price.
• Don’t assume "generic" means cheaper. Sometimes it means "same company, different label."

If cost is your main concern, go for the traditional generic. If you want the exact same experience-same size, same feel, same side effects-ask for the authorized version. Just know you’re paying more for familiarity.

What’s Next?

Regulators are watching. Congress is debating. The CREATES Act of 2019 tried to stop some anti-competitive behavior, but it didn’t shut down authorized generics.

The industry is adapting. Companies like Novartis are now planning "dual launches"-introducing the brand and its future generic at the same time, so patients slowly shift over before the patent even expires.

This isn’t about cheating the system. It’s about playing the game as it’s written. The Hatch-Waxman Act of 1984 gave brand companies this loophole. And they’ve used it well.

The real question isn’t whether it’s legal. It’s whether it’s fair. And that’s still being decided.