Every insurance policy I've ever had has stipulated that if a generic is available, the insurance will not pay 100% for the brand name drug. Wouldn't that be enough to keep generics in business?
This only applies if the active ingredient is the same molecule in the generic and the brand-name drug. Because drug B is has a patent monopoly scaring people off making generics, this is never the case.
In 2012, 84% of dispensed drugs in the United States were generics.[1]
Yes, the original manufacturer often spends money to develop follow on versions that can qualify for new patents, but this isn't always an effective strategy. When it is, it's usually because the follow on version has substantial benefits for patients (e.g., monthly infusions at the doctor's office instead of weekly). If those benefits aren't there, insurers can and will decline to cover the new form of the drug and insist on the generic.
