When a pharmaceutical company first markets a drug, it is usually under a patent that allows only the pharmaceutical company that developed the drug to sell it. Generic drugs can be legally produced for drugs where: 1) the patent has expired, 2) the generic company certifies the brand company’s patents are either invalid, unenforceable or will not be infringed, 3) for drugs which have never held patents, or 4) in countries where a patent(s) is/are not in force.[citation needed] The expiration of a patent removes the monopoly of the patent holder on drug sales licensing. Patent lifetime differs from country to country, and typically there is no way to renew a patent after it expires. A new version of the drug with significant changes to the compound could be patented, but this requires new clinical trials and does not prevent the generic versions of the original drug.

This allows the company to recoup the cost of developing that particular drug. After the patent on a drug expires, any pharmaceutical company can manufacture and sell that drug. Since the drug has already been tested and approved, the cost of simply manufacturing the drug will be a fraction of the original cost of testing and developing that particular drug.

The principal reason for the relatively low price of generic medicines is that competition increases among producers when drugs no longer are protected by patents. Companies also incur fewer costs in creating the generic drug, and are therefore able to maintain profitability while offering the drug at a lower cost to consumers. The costs of these generic drugs are so low that many developing countries can easily afford them. For example Thailand is going to import millions of pills of the generic version of Plavix, a blood-thinning treatment to prevent heart attacks, at a cost of 3 US cents per pill from India, the leading manufacturer of generic drugs.

Generic manufacturers do not incur the cost of drug discovery, and instead are able to reverse-engineer known drug compounds to allow them to manufacture bioequivalent versions. Generic manufacturers also do not bear the burden of proving the safety and efficacy of the drugs through clinical trials, since these trials have already been conducted by the brand name company. In most countries, generic manufacturers must only prove that their preparation is bioequivalent to the existing drug in order to gain regulatory approval. It has been estimated that the average cost to brand-name drug companies of discovering and testing a new innovative drug (with a new chemical entity) may be as much as $800 million.

Generic drug companies may also receive the benefit of the previous marketing efforts of the brand-name drug company, including media advertising, presentations by drug representatives, and distribution of free samples. Many of the drugs introduced by generic manufacturers have already been on the market for a decade or more, and may already be well-known to patients and providers (although often under their branded name).

Prior to the expiration of a drug patent, a brand name company enjoys a period of “market exclusivity” or monopoly, in which the company is able to set the price of the drug at the level which maximizes profitability. This price often greatly exceeds the production costs of the drug, which can enable the drug company to make a significant profit on their investment in research and development. The advantage of generic drugs to consumers comes in the introduction of competition, which prevents any single company from dictating the overall market price of the drug. With multiple firms, the profit-maximizing price generally reflects the ongoing cost of producing the drug, which is usually much lower than the monopoly price.

For as long as there has been baldness, it seems, there have been efforts to cure it: oils and creams, toupees and transplants, not to mention what hair stylists gingerly term ”the comb-over.” But as much as some men may have wanted one, there has never been a baldness pill — until now.

The Food and Drug Administration announced today that it had given Merck & Company, the maker of crucial treatments for heart disease, osteoporosis and AIDS, permission to sell a tiny tan octagonal tablet that, experiments show, either promoted the growth of hair or at least stopped hair loss in 83 percent of men who took it.

There are, however, some drawbacks: The pill, which will be marketed as a prescription medicine under the brand name Propecia, can cause birth defects and so is not approved for women. It is useful only for the genetic condition known as male pattern baldness. It must be taken once a day, every day, for the rest of a bald man’s life. And it carries a slight risk of impotence, lasting as long as it is taken.

”This is not a panacea,” said Dr. E. William Frank, a dermatologist at Beth Israel Deaconess Medical Center in Boston who has been following the progress of the drug during testing. ”It’s not going to grow hair on the pate of every man who takes it. But the clinical studies which have been done so far are promising.”

Critics say the idea of a prescription drug for baldness is frivolous, and complain that no long-term studies have been conducted on the drug.

”It is a cosmetic issue,” said Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group, an advocacy organization in Washington. ”What is the risk that we are trading off for a cosmetic benefit?”

And John T. Capps 3d, founder of Bald-Headed Men of America, a support group for bald men, said no right-thinking bald man would even consider a pill.

”We believe that skin is in,” Mr. Capps said.