History of Generic Drugs in the United States: How They Became 90% of Prescriptions

Today, more than 9 out of 10 prescriptions filled in the U.S. are for generic drugs. They’re cheaper, just as effective, and widely trusted. But this wasn’t always the case. Just 40 years ago, generics made up less than one-fifth of all prescriptions. The journey from suspicion and scarcity to dominance wasn’t smooth-it took decades of failed laws, deadly scandals, political battles, and one landmark piece of legislation that changed everything: the Hatch-Waxman Act.

The Early Days: No Standards, No Safety

Before the 1800s, medicine in America was a wild west. Anyone could sell anything labeled as a cure. No one checked what was inside. In 1820, eleven doctors met in Washington, D.C., and created the first U.S. Pharmacopeia-a list of approved drugs and their ingredients. It was the first step toward standardization. But it wasn’t law. It was just a suggestion.

By 1848, Congress passed the Drug Importation Act after too many imported medicines turned out to be fake or poisonous. Customs agents were given the power to stop bad drugs at the border. Still, there was no requirement for manufacturers to prove their products worked. That changed in 1906, after public outrage over contaminated food and drugs led President Theodore Roosevelt to sign the Federal Food and Drugs Act. For the first time, labels had to be truthful. If a drug claimed to cure cancer but didn’t contain the ingredient it promised, it was illegal.

Then came the Elixir Sulfanilamide disaster in 1937. A pharmaceutical company dissolved a new antibiotic in diethylene glycol-a chemical used in antifreeze-and sold it as a liquid medicine for children. More than 100 people died, mostly kids. The public outcry was immediate. Congress acted fast. In 1938, they passed the Federal Food, Drug, and Cosmetic Act (FDCA). This law required drugmakers to prove their products were safe before selling them. It didn’t require proof they worked-just that they wouldn’t kill you. That loophole would last for another two decades.

Prescription Rules and the Efficacy Gap

In 1951, the Durham-Humphrey Amendment split drugs into two categories: those you could buy over the counter and those that needed a doctor’s prescription. That system still exists today. But the big problem remained: drugs already on the market didn’t have to prove they worked. Thousands of medications, many dating back to the 1930s, were still being sold without any real evidence of effectiveness.

That changed in 1962 with the Kefauver-Harris Drug Amendments. The trigger? The thalidomide tragedy in Europe, where a drug given to pregnant women caused severe birth defects. Although thalidomide wasn’t approved in the U.S., the FDA’s refusal to license it due to safety concerns made lawmakers realize how weak the system was. The new law required drugmakers to prove both safety AND effectiveness before approval. It also forced companies to submit data on all drugs sold between 1938 and 1962. Thousands of older drugs were pulled from the market because they couldn’t prove they worked.

Around the same time, Medicare and Medicaid were created in 1965. Suddenly, the federal government was paying for millions of prescriptions. And it didn’t want to pay inflated prices for brand-name drugs when cheaper alternatives existed. But there were no clear rules for generics. Manufacturers didn’t know how to get approval. Doctors didn’t trust them. Pharmacies didn’t stock them. The system was broken.

The Hatch-Waxman Act: The Turning Point

In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act-better known as the Hatch-Waxman Act. It was a compromise. Brand-name drug companies got extended patent life to make up for time lost during FDA review. Generic manufacturers got a clear, faster path to market.

Before Hatch-Waxman, a generic company had to run full clinical trials to prove its drug worked. That cost millions and took years. The new law created the Abbreviated New Drug Application (ANDA). Generic makers no longer had to repeat expensive human trials. They only had to prove their drug was bioequivalent-meaning it released the same amount of active ingredient into the bloodstream at the same rate as the brand-name version. That cut approval time from years to months and reduced costs by 80%.

The results were immediate. Generic drug use jumped from 19% of prescriptions in 1984 to over 50% by 1995. By 2022, it hit 90.5%. The savings were staggering. In 2021 alone, generics saved the U.S. healthcare system $373 billion. Over the past decade, that number exceeded $3.7 trillion.

How Generics Are Made and Approved Today

Today, the FDA’s Generic Drugs Program oversees more than 22,000 generic products and 13,000 manufacturing sites worldwide. To get approved, a generic company must submit an ANDA showing:

• The active ingredient matches the brand-name drug exactly
• The dosage form, strength, and route of administration are identical
• The drug is bioequivalent-absorbed the same way in the body
• The manufacturing facility meets the same quality standards as brand-name plants

The FDA doesn’t require generics to have the same inactive ingredients (like fillers or dyes), but those can’t affect how the drug works. The agency inspects factories-both in the U.S. and abroad. About 80% of active pharmaceutical ingredients (APIs) come from China and India. That’s a vulnerability. When a factory in India gets shut down for quality violations, shortages can ripple across the country.

In 2012, Congress passed the Generic Drug User Fee Amendments (GDUFA). It gave the FDA money to hire more reviewers. Before GDUFA, it took an average of 30 months to approve an ANDA. Today, it’s under 10 months. Approval rates jumped from 45% to 95%.

The Dark Side: Price Gouging and Shortages

Despite their success, generics aren’t perfect. Between 2013 and 2017, the price of 15% of generic drugs increased by more than 100%. Some drugs, like doxycycline or chlorpromazine, went from pennies to dollars per pill. Why? When only one or two companies make a drug, they can raise prices with little competition. In some cases, manufacturers simply stopped making low-margin drugs because it wasn’t profitable.

Between 2018 and 2022, the FDA recorded 1,234 drug shortages. Two-thirds of them involved generic drugs. Many were tied to manufacturing problems, supply chain delays, or companies exiting the market. One drug, nitrofurantoin, used to treat urinary tract infections, was unavailable in many states for over a year. Patients had to switch to more expensive alternatives.

Brand-name companies also found ways to block generics. Some would refuse to sell samples to generic makers, making it impossible to run bioequivalence tests. Others would pay generic companies to delay their entry into the market-a practice called “pay-for-delay.” In 2019, Congress passed the CREATES Act to stop these tactics. As of 2022, the FDA had taken 27 enforcement actions under the law.

The Future: Biosimilars and Beyond

The next frontier isn’t traditional generics-it’s biosimilars. These are copies of complex biologic drugs, like those used to treat cancer, rheumatoid arthritis, and diabetes. Unlike small-molecule generics, biosimilars are made from living cells. They’re harder to replicate and cost far more to develop.

The first biosimilar was approved in the U.S. in 2015. Since then, the market has grown slowly. But with over $100 billion spent annually on biologics, the potential savings are enormous. Analysts expect biosimilars to capture 10-15% of the biologic market by 2027. That could mean billions more in savings for patients and insurers.

The FDA is also working on new ways to speed up approvals for generic drugs used in emergencies, like antibiotics or vaccines. They’re testing faster review tracks and better global coordination with regulators in Europe, Canada, and Japan.

Why It Matters

Generic drugs aren’t just cheaper versions of brand-name pills. They’re a cornerstone of affordable healthcare. Without them, millions of Americans couldn’t afford their prescriptions. A person on insulin might pay $300 a month for the brand name. With a generic, it’s $25. A heart medication that costs $150 per month as a brand might be $10 as a generic.

The history of generics is a story of public pressure, regulatory reform, and economic necessity. It’s proof that when the system works, it can deliver massive benefits to everyday people. But it’s also a warning: without constant oversight, market forces can undermine the very thing that makes generics so valuable-competition.

The next chapter will be written by regulators, manufacturers, and patients. Will we protect the system that saved trillions? Or will we let profit motives erode access to the medicines people need?