Among the most controversial issues surrounding the use of generic drugs is the reliance on bioavailability data to approve generic products. Bioequivalence does not necessarily translate into therapeutic equivalence. In some cases, because of the broad interpretation of drug equivalence, patients may not be receiving adequate amounts of medication, while others may be receiving toxic doses. In contrast, rigorous rules exist for the approval of brand-name medications. Resolving the generic drug standard issue by adopting stricter guidelines for generic drug approval based on clinical efficacy and toxicity data rather than on the bioequivalence standard currently being used would more likely result in safer, more effective patient care. Economic burdens for postmarketing research should be shared jointly by the research-oriented and generic drug companies. Such a policy would ensure continued research and new drug development. This paper reviews major scientific, economic, social, and legal issues involved in generic drug use with particular emphasis on the psychotropic drugs.