History of Generic Drugs in the United States: How Cheaper Medicines Became the Norm

By the time you pick up your prescription at the pharmacy, there’s a better than 90% chance you’re holding a generic drug. It’s not just common-it’s the backbone of how Americans afford their medicines. But this wasn’t always the case. For most of the 20th century, brand-name drugs dominated. The shift to generics didn’t happen by accident. It took decades of broken safety laws, deadly scandals, political battles, and one landmark law that changed everything.

The First Steps Toward Drug Standards

Long before the FDA existed, Americans had no way to know if the medicine they bought was real. In 1820, eleven doctors met in Washington, D.C., and created the first U.S. Pharmacopeia-a list of standard drug formulas. Their goal? To stop pharmacists from selling fake or weak medicines. It was a start, but not enough. By the 1840s, imported drugs were often contaminated. The 1848 Drug Importation Act gave U.S. Customs the power to block bad drugs at the border. Still, there was no law forcing manufacturers to prove what was inside their bottles.

In 1888, the American Pharmaceutical Association published the National Formulary, another attempt to standardize drug quality. But without enforcement, counterfeiters kept thriving. The real turning point came in 1906, when President Theodore Roosevelt signed the Federal Food and Drugs Act. For the first time, labels had to list ingredients. If a drug was misbranded or adulterated, the government could act. This law didn’t require drugs to be safe or effective-it just made lying on the label illegal. But it laid the foundation for the modern FDA.

Deadly Mistakes Force Change

The 1937 Elixir Sulfanilamide disaster changed everything. A pharmaceutical company dissolved a new antibiotic in diethylene glycol-a toxic antifreeze ingredient-and sold it as a sweet liquid for children. Over 100 people died, mostly kids. Public outrage forced Congress to act. In 1938, the Federal Food, Drug, and Cosmetic Act (FDCA) was passed. For the first time, drugmakers had to prove their products were safe before selling them. The FDA gained real power. But there was still a loophole: companies didn’t need to prove their drugs actually worked.

That changed in 1962. The Kefauver-Harris Drug Amendments required proof of both safety and effectiveness. Before this, drugs like thalidomide (which caused severe birth defects in Europe) could have slipped through U.S. approval. The law also forced drugmakers to submit data on every drug on the market since 1938. Thousands of drugs were reviewed. Many were pulled. The FDA became a true gatekeeper.

Why Generic Drugs Were Still Rare

Even after 1962, generic drugs made up only about 19% of prescriptions. Why? Because brand-name companies held patents and kept prices high. Generic manufacturers couldn’t just copy a drug. They had to run full clinical trials-just like the original maker. That cost millions. Few companies could afford it. And even if they did, brand-name companies used legal tricks to block them. The system was stacked against competition.

Then came Medicaid and Medicare in 1965. Suddenly, the federal government was paying for millions of prescriptions. They didn’t want to overpay. Officials started asking: Why buy the expensive brand when a cheaper version does the same thing? But without a legal path, generics couldn’t enter the market. That changed in 1984.

The Hatch-Waxman Act: The Game Changer

The Drug Price Competition and Patent Term Restoration Act-better known as the Hatch-Waxman Act-was passed in 1984. It was a compromise. Brand-name companies got extended patent life to make up for time lost during FDA review. In return, generic makers got a new, faster approval path called the Abbreviated New Drug Application (ANDA).

Before Hatch-Waxman, generics had to prove safety and effectiveness through full clinical trials. After? They only had to show they were bioequivalent-meaning they delivered the same amount of active ingredient into the bloodstream at the same rate as the brand. No more repeating expensive human trials. No more waiting a decade to enter the market. The law also created a 180-day exclusivity period for the first generic company to challenge a patent, giving them a financial head start.

The results were immediate. Generic drug use jumped from 19% in 1984 to over 50% by the late 1990s. Today, it’s 90.5%. That’s more than 4 billion prescriptions a year filled with generics.

How Much Have Generics Saved?

The savings are staggering. In 2021 alone, generic drugs saved the U.S. healthcare system $373 billion. Over the last decade, that adds up to more than $3.7 trillion. The Congressional Budget Office found generics cut prescription costs by 80-85% compared to brand names. Yet they make up only 23.4% of total drug spending. That’s the power of competition.

Take a common drug like lisinopril, used for high blood pressure. The brand version, Zestril, cost over $100 a month in the early 2000s. Today, the generic version costs less than $5. Same active ingredient. Same effect. Same side effects. But the price dropped because five different companies now make it.

The Dark Side of Success

But it’s not all smooth sailing. As generics became the norm, new problems emerged. Between 2018 and 2022, the FDA recorded 1,234 drug shortages. Two-thirds of them involved generic drugs. Why? Because many generics are made overseas-80% of active pharmaceutical ingredient (API) facilities are in China and India. When a factory in India gets shut down for quality violations, or a shipment gets delayed, patients in the U.S. can’t get their medicine.

Another issue: price spikes. While most generics got cheaper, about 15% of them saw price increases over 100% between 2013 and 2017. Why? Because if only one company makes a drug, and that company owns the only factory that can produce it, they can raise prices with little pushback. Some drugs, like doxycycline or nitrofurantoin, have been known to jump from $20 a month to $2,000 overnight.

Brand-name companies also found ways to delay generics. One tactic? Refusing to sell samples of their drug to generic makers so they can’t run the required bioequivalence tests. The 2019 CREATES Act was passed to stop this. As of 2022, the FDA had taken 27 enforcement actions under the law.

Modern Challenges and the Future

The FDA launched the Generic Initiative for Value and Efficiency (GIVE) in 2007 to clear backlogs. Then came GDUFA-the Generic Drug User Fee Amendments-in 2012. Now, the FDA reviews ANDAs in about 10 months, down from 30. Approval rates jumped from 45% to 95%. The system works better than ever.

But the next frontier is biosimilars-generic versions of complex biologic drugs like Humira or Enbrel. These aren’t simple pills. They’re made from living cells. Getting approval is harder. But the market is growing. Analysts predict biosimilars will be the next big wave of savings, potentially cutting costs by 80% for drugs that currently cost over $100,000 a year.

Right now, the FDA oversees more than 22,000 generic products and 13,000 manufacturing sites worldwide. About 900 new ANDAs get approved each year. The goal? Keep prices low, supply steady, and quality high. It’s not perfect. But without the history of bad laws, deadly mistakes, and hard-won reforms, none of this would exist.

What’s Next?

The U.S. generic drug system is one of the most successful public health policies in modern history. It’s not just about saving money-it’s about access. Millions of people rely on generics to take their heart medication, antibiotics, insulin, and antidepressants. Without them, many would skip doses or go without.

The future depends on three things: keeping supply chains secure, preventing price gouging, and making sure new players can enter the market. If those hold, generics will keep saving lives-and billions-for decades to come.