Prescription Drug Prices Increase About 0.5% in Third Quarter, AARP Study Finds
Manufacturer list prices for brand name prescription drugs increased 0.5%, on average, in the third quarter, compared with 1.8% a year earlier and 3.5% in the first quarter, according to an AARP study scheduled for release on Monday, the Wall Street Journal reports. However, over the 12-month period that ended in September, prices increased 7.4%, or more than three times the rate of general inflation, according to the study.
The study, which AARP plans to release in conjunction with the announcement of a new prescription drug price comparison program in New York, did not determine the reasons for the low third-quarter increase in prescription drug prices but cited the launch of the Medicare prescription drug discount cards program in June.
According to the Journal, "Some analysts also believe that aggressive drug-price increases before the election could have made drug companies political targets," and "drug makers now seem to be stepping up the pace of price increases." Last month, prices for nine of the top 50 brand-name medications increased between 1.6% and 6.9%, compared with three drugs that saw a price increase a year earlier, according to Delta Marketing Dynamics.
According to the Journal, pharmaceutical companies "have plenty of incentive to raise prices in advance of the 2006 Medicare drug benefit, when greater pricing pressures are expected."
AARP Policy Director John Rother said, "Price increases hurt more than just AARP members. They break state Medicaid budgets and strain employers and health insurers." He added that although pharmaceutical companies increase prices for a number of reasons, "the desire to get the price baseline higher prior to the start of a Medicare drug benefit seems to be one of those factors."
Richard Evans of Sanford Bernstein, said, "Pfizer, Merck and Johnson & Johnson are all kind of desperate. They need price in order to keep revenues within expected ranges."
A spokesperson for AstraZeneca, which last month increased prices on primary care medications between 1.6% and 6%, said that the company takes "price increases in line with the rest of the industry." A spokesperson for Eli Lilly, which did not increase prices last month, said that company "pricing decisions are not politically driven, but value-driven" (Won Tesoriero, Wall Street Journal, 12/6). The studies are available online.