You probably know that generic drugs are a lot cheaper than brand name drugs, but you may wonder why. Are they lower quality? Less effective?

The FDA requires that a generic drug have the same active ingredient, quality and strength as the brand-name equivalent. The cost difference between brands and generics comes from the cost of bringing them to market.

A “brand name” drug is discovered, developed and marketed by a pharmaceutical company. Once discovered, the company quickly files for a patent to prevent other companies from copying and selling it. This gives them time to recoup research and development costs. On average, it takes $1 billion and 12 years for a single drug to travel from research lab to patient. That’s why brand names are more expensive.

Generics only become available once the patent expires – usually after 10 to 17 years. Then, other drug makers can step in and market the brand as generics. Because generic drug companies don’t have to recover research, development and marketing costs, generics are less expensive.

About 70 percent of prescriptions dispensed in the U.S. are generics, and using a generic drug is a great way to save money. For example, a popular brand name blood pressure pill costs $150 for a 30-day supply. A generic version costs $16.

If you have prescription-drug insurance, your copay for a generic is likely much lower than that for brand name drugs. For example, in a common “three-tier” copayment structure, you might pay $10 for a generic, $25 for a preferred brand, and $35 for a non-preferred brand.

If your doctor writes you a prescription, ask if a generic is available and appropriate for your condition.