Generic drugs cost less than brand-name drugs because generic drug applicants do not have to repeat animal and clinical trials.
Brand name drugs are protected by patents that prohibit others from making and selling copies of the same drug. The copyright protects the company's investment in the drug's development by giving the company the sole right to sell it while the patent is in effect. The reason branded drugs are comparatively expensive is that when a pharmaceutical company is developing a new drug, it files a license that prohibits other manufacturers from reproducing or selling their medication in any form or way for a set period. It only allows other manufacturers to produce the generics after the patent and exclusivity rights have expired.
Generic drugs do not have to repeat animal and clinical trials as required by brand-name medicines to prove safety and efficacy. Generic drugs are only cheaper because the manufacturers did not have to bear the expenses of developing and marketing a new drug. When a company brings a new drug in the market, it has already spent substantial money on research, development, marketing, and promotion of the drug.