Looking to Save on Drugs? Go Generic

Source: AARP Press Center | 2009-04-16

April 16, 2009

Contact: AARP Media Relations, 202-434-2560, media@aarp.org

WASHINGTON—Consumers looking to save in today’s tough economy should start by talking to their doctors about their prescription drugs, according to a new report by AARP. The latest AARP “Rx Watchdog Report” finds that manufacturer prices for widely used brand name prescription drugs jumped by nearly nine percent in 2008, marking the largest average annual increase in six years and far exceeding the general inflation rate of just 3.8 percent.

“A person taking three brand name prescription drugs could see his or her annual costs climb by more than $550 in just one year,” said AARP Public Policy Director John Rother. “Switching to generic drugs whenever possible is one of the quickest and easiest ways to drastically reduce your health care bills.”

In contrast, the study by AARP’s Public Policy Institute found that the manufacturer prices of widely used generic drugs continued to decrease in 2008, falling by an average of 10.6 percent. The vast majority of generics (83 percent) did not change in price in 2008, despite an increase in general inflation. Many of the generics that did drop in price saw drastic decreases. While the manufacturer price for the brand name antidepressant Zoloft (50 and 100 mg tablets) increased by 12.3 percent in 2008, the manufacturer price for generic sertraline made by Teva Pharmaceuticals decreased by 45.1 percent.

Even for those with prescription drug coverage, switching to generics can mean substantial savings. Cost sharing for generics remains dramatically lower than for many brand name drugs. In 2007, generic drug copayments averaged less than $8, while average copayments for “preferred” and “non-preferred” brand name drugs were $19 and $28 according to a report by Express Scripts.

AARP’s report also examined the manufacturer prices of widely used specialty prescription drugs, which treat serious illnesses like cancer, multiple sclerosis and rheumatoid arthritis. These drugs had even larger price increases than traditional brand name drugs, rising an average of 9.3 percent in the last year. The average annual increase in the cost of therapy for a specialty drug grew from $2,297 to $2,860 between 2007 and 2008. Thirty-one of the widely used specialty drugs were biologic drugs, which are made from living organisms. There currently is no FDA pathway for the approval of less expensive generic versions of biologic drugs, leaving manufacturers free to continue charging the same or even higher prices.

Rother added, “Specialty drugs are already expensive because of their development costs, so it doesn’t help that many are biologic drugs that don’t face generic competition. That’s why we need health reform now. Bringing generic biologic drugs to the market can dramatically lower costs for the millions of Americans who can’t afford the life-saving drugs they need.”

As a part of its health reform campaign, AARP is urging Congress to address the rising cost of prescription drugs, particularly through policies that will bring more generic competition to the marketplace. Cost saving measures include allowing Medicare to negotiate directly with drug makers, closing loopholes that allow brand name drug makers to pay off generic drug producers, allowing for the legal importation of safe prescription drugs from abroad, and creating a pathway for the approval of generic versions of biologic drugs.

The list of prescription drugs analyzed in the AARP “Rx Watchdog Report” is based on the drugs most widely prescribed to Medicare Part D beneficiaries. Price changes are measured using changes in the wholesale acquisition cost (WAC) as published by the Medi-Span Price-Chek PC database.

The complete AARP “Rx Watchdog Report” is available at http://www.aarp.org/research/health/drugs/rx_watchdog.html.

For more information, visit AARP.org and HealthActionNow.org.

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