According to this article on The Wall Street Journal Blog when the price of generic drugs plunges, Medicare is slow to reflect that price change.
A report published by the Health and Human Services’ inspector general looks at irinotecan, which is a cancer that went generic in February of this year. The average price of the drug factoring in sales of the branded version was $52. During the current quarter, Medicare was paying about $75 for irinotecan, which is still far above the average price.
Read the full report here.