What is a brand-name drug?

Answer:
A brand-name drug is a drug manufactured by

a major pharmaceutical company that has a trade name and patent protection. Brand-name drugs are often marketed under a specific name. Brand-name drugs are usually issued a patent that lasts for 20 years. While the drug is under patent protection, no other companies may manufacture a generic version. This 20 year period allows the manufacturer exclusive license to manufacture and sell the drug. During this time, the drug may be quite expensive as the manufacturer is trying to recoup their research and development costs. In addition, because there is no competition, the drug’s price may remain high.

After the patent expires, other drug manufacturers can apply to the FDA to earn the right to produce a generic version of the drug. Generics are almost always less expensive because the generic manufacturer does not have the initial research and development costs to recover. In addition, several different manufacturers (and in some cases the original manufacturer) begin making generic versions which increases competition and brings down the price.