AARP Report Finds Brand Name Drug Prices Continue to Soar

Source: AARP Press Center | March 5, 2008

March 5, 2008

Contact: Jordan McNerney, AARP, 202-434-2560, jmcnerney@aarp.org

According to a report released today by AARP, pharmaceutical companies have substantially raised prices on 220 brand name prescription drugs most commonly used by people in Medicare Part D since the implementation of the drug benefit in 2006.

AARP has studied drug prices since 2002 and reported the findings in a series of Watchdog reports. Today’s report expands on the series by focusing its analysis on those brand prescription drugs most widely used by people enrolled in Medicare Part D.

The Watchdog report, which was produced by AARP’s Public Policy Institute (PPI), found that prices of brand name drugs most commonly used by people in Medicare Part D rose by an average of 7.4 percent in 2007 – nearly two and a half times the rate of general inflation. The report concludes that rising prices threaten consumers by increasing the likelihood of higher insurance premiums and the chance that people will fall into the Medicare coverage gap, and increasing the out-of-pocket expenses of those who find themselves in this “donut hole.”

“Medicare Part D is helping millions of people afford their prescription drugs, but as brand name drug costs continue to soar more needs to be done to keep drugs affordable,” said John Rother, AARP Director of Public Policy. “The Medicare Part D benefit helps more people afford their prescription drugs. But we must make greater progress in putting downward pressure on drug prices."

The average treatment cost exploded from $80 per year per prescription in 2002, to $151 in 2007. A person who took three brand name prescriptions to treat a chronic condition over this period saw an increase in their yearly costs of more than $1,600 between 2002 and 2007. The study found brand name drug prices increased far greater than general inflation since 2002, with dramatic spikes since 2006, the period when Medicare Part D was implemented.

“This report raises questions about why the pharmaceutical companies so dramatically increased the costs of popular brand name drugs at the same time Medicare began offering drug coverage,” added Rother. “When pharmaceutical companies raise wholesale prices, consumers are ultimately stuck with the bill.

“In the meantime, our elected leaders need to find sustainable solutions to the skyrocketing costs of drugs that are squeezing government programs like Medicare, employer-sponsored health plans, and individual consumers.”

AARP continues to fight to make prescription drugs more affordable for all Americans. The organization supports federal legislation to allow the Food and Drug Administration to create a safe pathway for cost-effective generic biologics and advocates for removing barriers that delay the speedy introduction of lower costs generic drugs. AARP supports legislation that would allow Americans to safely and legally import lower priced prescription drugs from other countries, as well as promoting evidence-based research.

“These policies can help millions of Americans better afford their prescription drugs by increasing competition and putting downward pressure on prices,” concluded Rother. “Congress has options – now we need results.”

For the complete Watchdog report visit: http://www.aarp.org/research/health/drugs/rx_watchdog.html

Visit www.AARP.org to learn more about how you can make a difference.

AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, AARP.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.