The Case in Point on Competition in the Market for Generic Prescription Drugs suggests that:

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The Case in Point suggests that generic prescription drugs are less expensive than their branded counterparts because of the ease of entry into the market. This is because once the patent for a branded drug expires, other firms can enter the market and start producing generic versions. This creates competition and drives down the price of the drug. The goods are not completely identical as there may be slight variations in formulation or inactive ingredients, but they are considered interchangeable by the FDA. Therefore, the firms producing generic drugs are not simply price takers, but can differentiate themselves through marketing, distribution, and pricing strategies.