Cost Comparison: Authorized Generics vs First-to-File Generics
Jan, 28 2026
When you pick up a prescription for a generic drug, you might assume all generics are the same. But that’s not true. There are two very different types of generic drugs on the market: authorized generics and first-to-file generics. And the difference between them can save you - or cost you - hundreds of dollars a year.
What exactly is an authorized generic?
An authorized generic is the exact same drug as the brand-name version, made by the same company, in the same factory, with the same ingredients and packaging - except it doesn’t carry the brand name. It’s sold under a different label, usually at a much lower price. For example, if you take the brand-name drug Lipitor, the authorized generic is identical, just labeled as "atorvastatin" and sold without the Pfizer name. These drugs enter the market through agreements between the brand manufacturer and a generic company. Often, they’re launched during the 180-day exclusivity window granted to the first generic company to challenge a patent. That’s when things get interesting.What’s a first-to-file generic?
The first-to-file generic is the first generic company to submit an application to the FDA to copy a brand-name drug. Under the Hatch-Waxman Act of 1984, this company gets 180 days of exclusive rights to sell the generic version before any other generic can enter. This exclusivity is a huge financial incentive - it can mean hundreds of millions in revenue for the generic maker. During those 180 days, they’re the only generic on the market. That gives them pricing power. But here’s the twist: if the brand company launches an authorized generic during that same window, it suddenly becomes a competitor - even though it’s the same drug.Price differences: Authorized generics crush first-to-file generics
The Federal Trade Commission (FTC) studied this exact scenario across 95 drugs. Here’s what they found:- When only the first-to-file generic is on the market, the generic price is about 14% lower than the brand-name price at retail.
- When an authorized generic joins in during the 180-day window, the retail price drops to 18% below brand - a 4 percentage point jump in savings.
Why does this happen?
It’s simple economics: competition drives prices down. When only one generic company sells a drug, they have little pressure to lower prices. But when two versions of the same drug hit the market - one from the original brand’s own factory, and one from the first-filer - they start undercutting each other. The authorized generic doesn’t need to invest in clinical trials or FDA approval. It’s already approved under the brand’s New Drug Application (NDA). That means it can launch fast, cheap, and with zero risk. The first-to-file generic, on the other hand, spent millions on litigation and paperwork. Now it’s forced to compete with a product that costs almost nothing to produce. The FTC found that this competition cuts the first-filer’s revenue by 40% to 52% during the exclusivity period. And that pain doesn’t disappear after 180 days - revenues stay lower for up to 30 months after the exclusivity ends.What about long-term savings?
The more competitors enter, the cheaper it gets. Here’s how prices drop as more generics flood the market:- One generic (first-to-file only): 39% cheaper than brand
- Two generics (first-to-file + authorized generic): 54% cheaper
- Four generics: 79% cheaper
- Six or more generics: over 95% cheaper
Do authorized generics hurt innovation?
Some worry that if brand companies can launch authorized generics to crush the first-filer’s profits, they’ll discourage future patent challenges. Why spend millions fighting a patent if the brand company can just undercut you with its own version? The FTC looked at this closely. Their analysis found no evidence that authorized generics reduced the number of patent challenges by generic companies. In fact, generic firms are still filing ANDAs at the same rate. The 180-day exclusivity is still worth hundreds of millions - even with the risk of an authorized generic entering. Dr. Robin Feldman, a top pharmaceutical policy expert, puts it simply: "The incentive to challenge patents remains strong because the payoff is still enormous. Authorized generics just make the race harder."
Who benefits the most?
You do. The FTC concluded that consumers and the healthcare system save money during the 180-day window when an authorized generic enters. Pharmacies benefit too - their profit margins go up because they’re buying cheaper and selling at competitive prices. Even insurers save because they’re paying less per prescription. The brand company doesn’t lose everything. They keep selling the branded version to people who still want the name, and they get a cut from the authorized generic through licensing deals. But the real winner? The patient who walks out of the pharmacy with the same drug for half the price.What should you do?
When your doctor prescribes a brand-name drug, ask if a generic is available. Then ask: "Is there an authorized generic?" Pharmacists know the difference. If your prescription is filled with a generic labeled as "[Drug Name]" - not a brand name - it could be the authorized version. Ask for it. It’s not always automatically dispensed. Don’t assume the first generic you see is the cheapest. In many cases, the authorized generic is priced lower than the first-to-file version - even during the exclusivity period. And if you’re on a long-term medication - like high blood pressure pills, statins, or antidepressants - even a 5% price difference adds up fast. Over a year, that’s hundreds of dollars in your pocket.What’s changing in 2026?
The FDA’s Generic Drug User Fee Amendments (GDUFA) have sped up approval times. What used to take 2-3 years now takes about 13 months less. That means more generics enter the market faster - and authorized generics are part of that wave. The FTC is still watching. In 2022, Commissioner Alvaro Bedoya said the agency remains vigilant about any anti-competitive behavior in the generics market. That includes situations where brand companies delay authorized generic launches to protect first-filer profits. The bottom line? The system isn’t perfect. But right now, authorized generics are one of the most effective tools we have to drive down drug prices - fast.Are authorized generics the same as brand-name drugs?
Yes. Authorized generics are manufactured by the same company that makes the brand-name drug, in the same facility, using the same ingredients and processes. The only difference is the label - no brand name, no marketing, just the generic version of the same exact drug.
Why are authorized generics cheaper than first-to-file generics?
Authorized generics don’t need to go through the expensive ANDA approval process. They’re already approved under the brand’s NDA. They also enter the market with lower marketing and legal costs. When they compete with the first-to-file generic, they force prices down - often below what the first-filer can offer.
Can I ask my pharmacist for an authorized generic?
Absolutely. Pharmacists know which generics are authorized. Ask specifically: "Is there an authorized generic for this drug?" They can often switch your prescription without needing a new doctor’s note, especially if it’s a common medication.
Do authorized generics affect the quality of the drug?
No. Authorized generics are identical to the brand-name drug in strength, safety, and effectiveness. The FDA requires them to meet the same standards. Many people actually prefer them because they’re made by the original manufacturer.
Why don’t more people know about authorized generics?
Because they’re not advertised. Brand companies don’t promote them. Pharmacies often don’t highlight them unless asked. Most patients assume all generics are the same. But once you know to ask, you can save significantly - especially on long-term prescriptions.