Authorized Generics vs First-to-File Generics: Cost Comparison Explained
Feb, 5 2026
When you fill a prescription, the type of generic drug you get can make a big difference in your out-of-pocket costs. Understanding the drug cost comparison between authorized generics and first-to-file generics can help you save money on prescriptions.
What Are Authorized Generics?
Authorized genericsare brand-name drugs manufactured by the original company or a licensee and sold under a generic label without the brand name. They enter the market when the brand company licenses a generic manufacturer to sell the drug. For example, when a brand like Lipitor's patent expires, the company might produce the generic version themselves and sell it as an authorized generic. This lets them keep some market share while offering lower prices.
What Are First-to-File Generics?
First-to-file genericsare generic drugs made by companies that are the first to submit an Abbreviated New Drug Application (ANDA) to the FDA. Under the Hatch-Waxman Act, these companies get 180 days of market exclusivity. During this time, no other generic can enter, but authorized generics can still compete. For instance, when a company like Teva files first for a drug like Singulair, they become the sole generic for half a year before others join.
How Costs Compare in Different Markets
The Federal Trade Commission (FTC) studied 95 drugs and found clear patterns. In markets with only a first-to-file generic (ANDA-only), retail prices average 14% below the brand price. But when an authorized generic joins the mix (ANDA+AG), prices drop further to 18% below brand. For pharmacies, the wholesale cost difference is even starker: 20% below brand with a single generic, but 27% lower with authorized generic competition.
Take the Average Manufacturer Price (AMP) data from the FDA's 2019 analysis. A single generic reduces the AMP by 39% compared to the brand. Adding an authorized generic pushes that to 54% below brand prices. With four competitors, prices fall to 79% below the brand. Once six or more generics enter the market, prices drop over 95%-meaning a $100 brand drug costs just $5 as a generic.
Impact on Pharmacies and Consumers
Pharmacy profits get a boost when generics enter the market. Drug Channels reported in 2011 that gross profit per prescription jumps when the first generic arrives. But when an authorized generic joins during the 180-day exclusivity period, profits climb even higher. This happens because competition drives down acquisition costs more than retail prices, leaving pharmacies with better margins.
For consumers, the added competition from authorized generics means bigger savings. The FTC confirmed that 'consumers benefit and the healthcare system saves money during the 180-day exclusivity period when an AG enters the market.' In practice, this often translates to $10-$20 savings per prescription on common medications like metformin or lisinopril.
Regulatory Views and Long-Term Effects
The FTC's 2013 report found that while authorized generics reduce the first-filer's revenue by 40-52% during the exclusivity period, this hasn't measurably reduced patent challenges by generic companies. 'There's no evidence that authorized generics lead to fewer patent challenges,' the report states.
However, not all authorized generics last. Health Affairs research in 2023 showed that about 20% of authorized generics launched between 2010-2014 had no sales in Medicare data after five years. This suggests some don't sustain long-term market presence.
Recent FDA reforms under GDUFA have sped up generic approvals, reducing time to market by 13 months. This could change the competitive landscape, making authorized generics less critical for driving early price drops.
Frequently Asked Questions
What's the difference between authorized generics and regular generics?
Authorized generics are made by the brand company but sold under a generic label. Regular generics (first-to-file) are made by other companies that file an ANDA. Authorized generics often enter the market earlier and can drive prices down more quickly.
How does the Hatch-Waxman Act affect generic drug pricing?
The Hatch-Waxman Act of 1984 created the 180-day exclusivity for first-to-file generics. This gives them a head start, but authorized generics can still enter during this period, adding competition that lowers prices further. Without this law, generics might take years longer to reach the market.
Do authorized generics cost more than regular generics?
No. The FTC found no evidence that authorized generics have higher prices than other generics. In fact, they often lead to greater discounts-up to 7% more in wholesale prices compared to markets without authorized generics. This means pharmacies pay less to buy them, which usually translates to lower prices for you.
Why don't more companies make authorized generics?
Brand companies sometimes use authorized generics as part of patent litigation settlements, which can delay other generics. However, the FTC's analysis shows this hasn't reduced the overall number of patent challenges by generic companies. It's a strategic move for brands to maintain some revenue while still allowing competition.
How much can I save with generics?
Generic drugs average 70-85% lower than brand-name drugs. With multiple competitors, prices drop even more-up to 95% below brand prices when six or more generics are available. For example, a $200 brand-name drug might cost just $15 as a generic with heavy competition.
Can authorized generics delay other generics from entering the market?
Yes, sometimes. Brand companies may launch authorized generics as part of settlement agreements that delay other generics. But the FTC found this hasn't reduced the overall number of patent challenges by generic companies. It's a complex trade-off where brands protect revenue, but competition still happens eventually.
What role does the FTC play in monitoring generics?
The FTC actively monitors the generics market for anti-competitive practices. Their reports show authorized generics generally benefit consumers by lowering prices, but they continue to investigate potential issues like pay-for-delay agreements. In 2022, Commissioner Alvaro Bedoya emphasized the FTC's vigilance on this issue.