Brand-Name Prescription Drug Prices Increased by 6.6% Between 2004, 2005, AARP Finds

Wholesale prices for brand-name prescription drugs between 2004 and 2005 increased by an average of 6.6% -- more than twice the inflation rate -- according to a study released on Tuesday by the Public Policy Institute at AARP, the New York Times reports (Freudenheim, New York Times, 8/16). For the study, Stephen Schondelmeyer, director of PRIME Institute at the University of Minnesota, and colleagues analyzed wholesale prices of 195 popular brand-name medications over a 12-month period that ended in March (Wolfe, Minneapolis Star Tribune, 8/16).

The study found that prices for 110 of the 195 brand-name medications increased between 2004 and 2005. According to the study, an average older patient who takes three brand-name medications daily would have experienced a $144.15 increase in prescription drug costs between 2004 and 2005 (Schmid, AP/Las Vegas Sun, 8/15). Between 2003 and 2004, prices for brand-name medications increased by an average of 7.1%, compared with the inflation rate of 2.7% (Minneapolis Star Tribune, 8/16). The study also found that prices for 75 generic medications increased by an average of 0.7% between 2004 and 2005 (Reuters/Arizona Daily Star, 8/16). Prices for three of the 75 generic medications increased in the first three months of 2005, according to the study.

Criticism

The Pharmaceutical Research and Manufacturers of America said that the study used "fuzzy math" (AP/Las Vegas Sun, 8/15). PhRMA Senior Vice President Ken Johnson said that the study analyzed only wholesale prices, which do "not reflect the true amounts paid by seniors for their medicines." According to Johnson, after rebates and discounts from health insurers are taken into account, prices for brand-name medications did not increase at a rate higher than inflation between 2004 and 2005.

Joseph Antos of the American Enterprise Institute added, "With the new Medicare benefit, no senior will have to pay the full retail price for prescription drugs."

Other Reaction

However, Dee Mahan, a health policy specialist with Families USA, said that analysis of the wholesale prices of brand-name medications is "valid" because most increases in those prices are passed to consumers after discounts are deducted.

In addition, Ann Smith, a spokesperson for pharmacy benefit manager Medco Health Solutions, said that the average 6.6% increase in prices for brand-name medications between 2004 and 2005 is "generally what we are also seeing" (New York Times, 8/16).

Schondelmeyer said, "They certainly do give rebates to some buyers, but the companies keep raising the base price on which the rebates are given so they're continuing to collect a lot more money" (Minneapolis Star Tribune, 8/16).

AARP CEO William Novelli said, "We are very disappointed that brand-name manufacturers have failed to keep their price increases in line with inflation, and we will continue to educate our members and the public about how best to find the most affordable prescription drugs to suit their needs" (AP/Las Vegas Sun, 8/15).

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