Back when I lived in New York, I had an interesting experience with my primary care physician, though at the time I didn’t think much of it. Suffering from a persistent case of bronchitis, my doctor prescribed me an antibiotic to help get rid of my cough. No big deal, right?

The medication had a fancy brand name that I’d never heard of, and in the end, worked just fine. However, it was noticeably more expensive than other prescriptions, with a commensurately higher co-pay than I was used to. In the grand scheme of things, it wasn’t such a big deal, maybe $15 or $20. But there were clearly other alternatives, including generic equivalents, that would have worked just as well and would have cost me a lot less.

Which made me wonder, why did my doctor give me something that cost more when there was a less expensive option that would have done the job? And why didn’t I say something? While I pondered these questions, I began to realize that being in the dark about generic prescription drugs can cost you more than you realize. In fact, according to a recent study by the insurance industry, the lack of knowledge and understanding about generic drugs is costing the public, not to mention the insurance companies, millions of dollars.

Most people are aware that generic drugs exist, and that they cost less than brand names. Many people, however, are hesitant to use them for a number of reasons. Our doctors don’t always offer them as a choice without some prompting, and we tend to take it on faith (mistakenly at times) that everything they do is solely in our best interest. Also, most of us equate cheaper with being less effective or lower in quality. With many things in life, you get what you pay for, but not necessarily with generic drugs.

According to the Food and Drug Administration (FDA) a generic drug is essentially “a copy that is the same as a brand-name drug in dosage, safety, and strength, how it is taken, quality, performance, and intended use.” They can also be substantially less expensive than their brand name counterparts.

That is because when pharmaceutical companies develop new drugs, they need to recoup their enormous costs and are rightfully rewarded with patents that give them sole rights to sell the drug so that they can set the price accordingly. As the patent nears an end, other manufacturers can apply for the right to make generic versions of the drug, though the original developer still retains certain marketing and patent rights.

Other companies that come out with generic versions can make them for a lot less because they bypass the startup expense, the need for research and development (R&D), and testing for safety (through clinical trials), all of which cost them a fortune. Furthermore, in simple economic terms, as more companies enter the picture, competition drives down the price.

It is important to keep in mind that generic drugs come under the same rigid scrutiny as the high-priced brand names. The FDA requires that all medications be safe and effective, so generic drugs have the same active ingredients and mode of action as brand names. Generic drugs are just as strong, carry the same risks and benefits, and work just as quickly. And contrary to popular belief, they are not produced in substandard facilities. In fact, as much as 50% of the generic drug market is linked to brand name manufacturers.

While it’s true that they may look and taste different, that is only because trademark laws forbid generic drugs from being identical to the brand name equivalents, and as a result, the inactive ingredients are changed. Furthermore, not every brand name medication has a generic alternative. This is because patents provide protection for 20 years, after which producers of generic drugs must still go through the FDA screening process for their product.

Even still, it is interesting when you consider that in a recent survey up to one third of the general public either is not aware of these facts or does not believe them. And with a potential savings of up to 50%-70%, it begs the question, why don’t more doctors (or at least my doctor!) recommend and/or prescribe more generic drugs? Conflict of interest, perhaps?

Whose to say? Whatever be the case, it makes good economic sense to keep in mind that generic drugs are a safe and effective alternative to brand name medications. Talk to you physician or pharmacist, and know your options. For further information, check out the FDA’s website, or contact your insurance company.

Being an informed patient will go a long way in protecting your health and finances, though it is a bit ironic to note that the insurance companies, often times looked upon as adversaries to the general public, are in effect protecting our interests by addressing their bottom line.

Not that I’m complaining.