Readers Question why are generic drugs cheaper than brand names?
An example from 2020. At Boots a tablet for relief of IBS (diarrhoea)
- Boots own brand (Loperamide Hydrochloride 18* 2mg) = £5.99 (£0.33 per 1 unit)
- Immodium (Johnson & Johnson)(Loperamide Hydrochloride 18 * 2 mg) = £9.29 (£0.51 per 1 unit)
Both have exactly the same amount of active ingredient (Loperamide hydrochloride), but the Boots is nearly 50% cheaper.
Why the difference in price?
- Brand loyalty. We are more likely to buy a good where we recognise the brand. Imodium is a well-known brand and people have a greater recognition of Imodium than the active ingredient Loperamide hydrochloride.
- Behavioural theory. If you are sick and in pain, it is understandable that you want to get the best medical treatment. If you go into a shop and see two options – which will you choose? It is not unreasonable that someone who didn’t know all about the active ingredients may assume that the more expensive medicine is more powerful medicine.
- Furthermore, you recognise one of the brands so you would rather stick with something you trust, rather than risk the less well-known brand. If you were buying petrol, we wouldn’t be willing to pay a 50% price premium. The only way we really judge petrol is based on petrol (we aren’t putting petrol in our bodies). But, when it comes to health, human psychology is different, we don’t want to be cheap with our health, it makes sense to try and get the best doctor, the best medicine – and usually a more expensive product indicates a better product.
- In this case, the more expensive product is no different to the cheaper product. The only difference is the packaging. But, if we have stomach problems do we go into the detail of what is actually in the pill we are taking? Pills seem so complicated and we feel we are unqualified to make a judgement, so the easiest way to make a judgement is to assume – the more expensive the better it is.
For many years, if I needed to, I always bought the most expensive branded drugs (could be things like aspirin, paracetamol, Nurofen/Ibuprofen.) I just bought without ever really investigating. You just assume the more expensive, better-packaged medicine is better for you. But, when I finally convinced myself the active ingredient is exactly the same, I always but the cheapest.
Did you know?
I heard a rumour that Tesco value baked beans are made by Heinz