It’s just obvious but I’ll explain it anyway. Let’s say a company spends $10 million developing a new drug. Let’s say the drug itself costs $5 to make + $5 to recover the cost of development (in a reasonable time frame), so the company has to charge $10 per pill.

The generics manufacturer has no research costs to recover, so they can sell each pill for $5 and turn a profit. Do you see what the issue is now?