A drug is composed of 1 or some active substances and some additives like excipients ... that are inactive pharmacologically.
When someone discovers an active substance (ie: a drug), he will be the only one authorized to produce it for a period of time. After the period is over, the other pharmaceutical companies will be able to produce the same active substance.
It says that a generic medicine has exactly the same active substance as the princeps. the only difference resides in the additives.
To know more about what these additives may add and the role they play, here is a good source: http://en.wikipedia.org/wiki/Excipient
How effective? Generic drugs have been approved to be just as effective as 'Brand' name drugs at treating disease.
There are active and inactive ingredients to a drug. The active ingredients are usually the same in brand and generic drugs. The difference is in the medications INACTIVE ingredients. A person may have a problem with INACTIVE ingredients which give him side effects. This is rare, but does happen.
For a set time period, the developer of the BRAND name drug has exclude rights to the distribution of that drug. In some cases this is 17 years, and that time is to recoup the costs of research and development of that drug. That length of time will change, I think.
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