Frequency Of Generic Drug Price Spikes And Impact On Medicaid Spending

Although generic drugs are typically inexpensive, rising prices among some generic drugs in recent years have raised concern. Using Medicaid data, we found that one in five generic drugs sold in the US experienced a price spike (defined as a doubling in price over the course of one year) initiated by at least one manufacturer during the period 2014-17. There was a trend toward fewer price spikes each year, from 7.8 percent of drugs in 2014 to 5.8 percent in 2017. Among drugs experiencing price spikes, 51 percent were injected products, 64 percent had three or fewer manufacturers, and 18 percent were in shortage at the time of the spike. Generic drug price spikes cost Medicaid $1.5 billion during 2014-16, representing 4.2 percent of all Medicaid generic drug spending in that period. The trend toward fewer price spikes over time may be due to increased public scrutiny and regulatory actions. However, price spikes can be very costly, and additional policies are needed to both ensure adequate competition and control prices among generic drugs.