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

Before generic drugs became the default choice for most prescriptions in the U.S., people paid far more for the same medicine. Today, over 90% of prescriptions filled are for generics. But how did we get here? It wasn’t luck. It was decades of law, scandal, innovation, and hard-fought policy changes that turned generics from an afterthought into the backbone of American healthcare.

The First Steps: Standardizing Medicine

In 1820, eleven doctors met in Washington, D.C., to write down what a real medicine should look like. They created the U.S. Pharmacopeia - the first official list of drug standards. Back then, medicine was a mess. Pills made in one town might be stronger, weaker, or even poisonous compared to the same name in another. No one knew what they were getting. This wasn’t just inconvenient - it was deadly.

By 1848, the government stepped in with the Drug Importation Act. It gave U.S. Customs the power to stop fake or contaminated drugs from crossing the border. That was the first real federal action to protect patients. Then, in 1888, the American Pharmaceutical Association released the National Formulary, a second official guide to drug quality. These weren’t laws yet, but they set the tone: medicine had to be reliable.

When Poison Became Law

The real turning point came in 1937. A company marketed a new antibiotic called Elixir Sulfanilamide - dissolved in a solvent called diethylene glycol. It tasted sweet, so people didn’t suspect anything. But diethylene glycol is antifreeze. Over 100 people, mostly children, died. Public outrage was immediate. Congress had no choice.

In 1938, President Roosevelt signed the Federal Food, Drug, and Cosmetic Act. For the first time, drug makers had to prove their products were safe before selling them. The FDA, which had been around since 1906, finally got real power. This law didn’t require proof of effectiveness - just safety. But it laid the groundwork for everything that followed.

Prescription Rules and the Efficacy Crisis

In 1951, the Durham-Humphrey Amendment split drugs into two categories: prescription and over-the-counter. That’s still how it works today. It kept dangerous drugs out of drugstores and put them under doctor control.

But a bigger problem remained. Thousands of drugs had been on the market since 1938 - with no proof they even worked. By the early 1960s, doctors and scientists were sounding alarms. Some drugs were useless. Others were dangerous. In 1962, Congress passed the Kefauver-Harris Drug Amendments. This time, companies had to prove their drugs worked. And they had to go back and prove it for every drug sold between 1938 and 1962.

That review took years. Many drugs were pulled. Others were reformulated. But the biggest effect? It made new drug development slower and more expensive. And that’s when the door opened for generics.

The Birth of the Modern Generic System

By the 1970s, healthcare costs were rising fast. Medicare and Medicaid - created in 1965 - were spending billions on brand-name drugs. Congress looked for ways to cut costs. One idea: use cheaper versions of the same drugs. But there was no legal way to approve them.

That changed in 1984 with the Hatch-Waxman Act. Officially called the Drug Price Competition and Patent Term Restoration Act, it created the Abbreviated New Drug Application (ANDA). Before this, a generic company had to repeat every clinical trial the brand-name maker did - a process that cost millions and took years. Hatch-Waxman said: if you can prove your drug is bioequivalent - meaning it works the same way in the body - you don’t need to repeat the trials.

The law also gave brand-name companies a short patent extension (up to five years) to make up for time lost during FDA review. It was a deal: innovation gets protected, competition gets a fair shot.

The results were dramatic. Before 1984, only 19% of prescriptions were for generics. By 1990, it was over 40%. Today, it’s 90.5%.

How Much Money Did Generics Save?

The numbers speak for themselves. In 2021, generic drugs saved the U.S. healthcare system $373 billion. Over the past decade, total savings passed $3.7 trillion. The Congressional Budget Office found generics cut drug spending by 80-85% compared to brand names.

And here’s the kicker: in 2022, generics made up 90.5% of prescriptions but only 23.4% of total drug spending. That means for every dollar spent on medicine, less than a quarter went to generics - even though they were used in nine out of ten cases.

That’s not just efficient. It’s revolutionary.

Problems Behind the Success

But the system isn’t perfect. One loophole in Hatch-Waxman lets brand-name companies sue generic makers just to delay entry. When that happens, the FDA must pause approval for up to 30 months. Many companies use this tactic - not because they believe their patent is valid, but to buy time. Between 2010 and 2020, over 70% of new brand-name drugs faced at least one such lawsuit to block generics.

Then there’s the supply chain. About 80% of the active ingredients in U.S. generics come from just two countries: China and India. When a factory in India gets shut down for safety violations - or when a natural disaster hits a Chinese supplier - shortages follow. Between 2018 and 2022, the FDA recorded 1,234 drug shortages. Two-thirds of them involved generic drugs.

Even worse, prices for some generics have spiked. Between 2013 and 2017, 15% of generic drugs saw price increases of over 100%. Some of these were old, cheap pills - like doxycycline or nitrofurantoin - used for common infections. Why? Because only one or two companies made them. When one quits, the other raises prices. It’s a broken market.

Fixing the System

The FDA tried to fix the backlog. In 2007, it launched the Generic Initiative for Value and Efficiency (GIVE). Then, in 2012, it introduced the Generic Drug User Fee Amendments (GDUFA). Under GDUFA, generic companies pay fees to fund FDA reviews. The result? Review times dropped from 30 months to 10. Approval rates jumped from 45% to 95%.

In 2019, Congress passed the CREATES Act. It stopped brand-name companies from refusing to sell samples of their drugs to generic makers - a tactic used to delay testing. As of late 2022, the FDA had taken 27 enforcement actions under this law.

Today, the FDA oversees more than 22,000 generic products and 13,000 manufacturing sites worldwide. About 900 new generic applications get approved every year.

What’s Next?

The next frontier is biosimilars - generic versions of complex biologic drugs like Humira or Enbrel. These drugs cost tens of thousands of dollars a year. Until now, no one could make a cheaper copy. But new rules and technologies are changing that. Analysts expect biosimilars to make up 10-15% of the biologics market by 2027.

The goal? Keep prices down. Keep supply stable. Keep patients alive.

The history of generic drugs isn’t just about science. It’s about who gets to live - and how much they pay for it. From a list of 11 doctors in 1820 to a global supply chain today, the fight for affordable medicine never ended. It just got smarter.