According to the World Health Organization, a generic drug is "a pharmaceutical product, usually intended to be interchangeable with an innovator product, that is manufactured without a license from the innovator company and marketed after the expiry date of the patent or other exclusive rights." Contrary to popular belief, generic drugs tend to be equally as effective as brand-name drugs, and come with the benefit of being more cost effective. The Food and Drug Administration (FDA) requires that generic drugs be as safe and effective as brand-name drugs, in addition to applying the same manufacturing standards to generic and brand-name drugs. According to the FDA's website, 50% of all generic drugs are manufactured by brand-name manufacturers, regardless of subtle differences such as taste or color, which arise due to trademark laws which do not allow for a generic drug to look identical to its brand-name counterpart.

An example of a generic drug is Metformin, which is a diabetes drug with the brand name Glucophage. Although these drugs have different names, they have an identical composition which is extremely beneficial to consumers on a budget. According to MedicineNet, generic drugs are only cheaper because the manufacturers have not had the expenses of developing and marketing a new drug. When a company brings a new drug onto the market, the firm has already spent substantial money on research, development, marketing, and promotion of the drug.

Following original research which allows for a drug to be approved, the FDA issues a patent which protects the drug from counterfeit competition for a specified period of time. In the United States the patent filed on a drug lasts for approximately 20 years; however, because companies file even before clinical trials, by the time the drug hits pharmacy shelves, the patent may only have10 years left. Following the expiration of a drug patent, manufacturers can apply to the FDA for permission to make and sell generic versions of the drug without being responsible for any startup costs.