Answer
Generic drug are not protected under patents, and any pharmaceutical company would be able to produce it, while brand name products are patent protected, where only one company is allowed to produce it.
Work Step by Step
When a brand name drug still has its patent, the only company able to produce it acts like a monopoly, as it has control over all means of production, and thus would produce at the profit maximizing output of MC=MR, which is not allocative efficient.
When these drugs lose their patents, other pharmaceutical companies are able to now produce this drug, thus the industry transforms from a monopoly to an oligopoly (since not many pharmaceutical companies exit due to high barriers to entry). With more competitors, the firm is not able to set prices with the market power that it used to have, and is forced to lower prices if it wants to retain profits. This would shift the industry closer to the point of P=MC, where allocative efficiency is reached, as the MR curve of oligopolies are less steep than it is for monopolies. However, since it remains as an oligopoly, barring any government intervention, allocative efficiency would not be reached, but the output would be closer to it.
