OBJECTIVES: The National Average Drug Acquisition Cost (NADAC) is a survey conducted by the Centers for Medicaid and Medicaid Services (CMS) to collect invoice purchase prices for Medicaid covered outpatient drugs purchased by community pharmacies. This study described trends in the NADAC for drugs that experienced generic competition in the US in the period 2014-2016.

METHODS: NADAC data were extracted from the CMS NADAC data files, and regulatory data were derived from the US Food and Drug Administration (FDA) database Orange Book. NADAC information included prices brand and generic products and their respective effective dates. NADAC values were converted to 2017 US dollars using the consumer price index. Brand and generic NADAC values were indexed using the brand NADAC at the date of the first generic entry as the reference. Median NADAC values were calculated at 24 and 12 months before, and 6, 12, 24 and 36 months after generic entry. Descriptive statistics were conducted in the study.

RESULTS: Twenty-two brand drugs with 53 different formulations/strengths experienced generic competitino in 2014-2016 and had information available in the NADAC database. Median NADAC values for brand drugs increased from 71.7% (n=11) of the brand NADAC at generic entry 24 months before generic entry to 86.0% (n=15) 12 months before generic entry; and continued to increase to 107.5% (n=21) and 108.9% (n=12) 12 months and 24 months after generic entry, respectively. The median NADAC for generic drugs was 67.3% (n=22), 56.0% (n=22), 25.8% (n=12), and 9.8% (n=8) at 6, 12, 24, and 36 months after generic entry, respectively.

CONCLUSIONS: Brand drug prices increased before and after generic entry. Generic drug prices decreased to half of the brand prices at generic market entry after one year of generic entry, and to one-tenth after 3 years. Generic competition results in a significant reduction in prices.