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Pharmaceutical Giants Continue to Raise Prices Higher Than Inflation

AARP’s Latest Drug Price Study Shows

As part of AARP’s "Rx Watchdog" effort, a report released by the organization today found that for the sixth year in a row, manufacturers of brand-name prescription drugs most widely used by older Americans raised the price they charge wholesalers and other direct purchasers higher than the general inflation rate. The average price change for a sample of 193 brand-name drugs was 6 percent in 2005 while inflation over those 12 months was 3.4 percent.

To help consumers better understand drug pricing and to add pressure on the industry to make drugs more affordable, AARP’s "Rx Watchdog" project monitors changes in manufacturers’ drug prices and issues quarterly reports on the results of analysis by the AARP Public Policy Institute.

In response to the 2005 price increases AARP Director of Policy and Strategy John Rother said, "Prices for brand name drugs have jumped 40 percent on average over the past six years, compared to inflation of only 17 percent. Since these price increases charged to wholesalers are generally passed on in the prices consumers ultimately pay, brand name drugs have become substantially less affordable for consumers at the same time they are becoming ever more essential to good medical care. These prices are reflected both in higher premiums for drug coverage as well as in higher out of pocket costs at the pharmacy counter."

"Drug affordability continues to be a major challenge and AARP is fighting high drug costs on many fronts. Greater transparency like the publishing of drug prices helps put some pressure on the industry, but much more needs to be done," Rother said.

AARP strongly supports the safe and legal importation of prescription drugs as one way to help consumers lower their costs. Among other measures, AARP also promotes the wise use of medications and the greater use of generics when appropriate.

While brand name prices continue their upward spiral, the price study found that, on average, generics continue to hold the line on price increases. AARP is strongly urging the FDA and Congress to add staff for quicker approval of generic drugs so they are available to consumers much sooner.

Of the 193 brand-name drugs in the 2005 sample, 187 are used in the treatment of chronic conditions that affect millions of older Americans—arthritis pain, osteoporosis, cardio-vascular disease, high blood pressure, gastrointestinal conditions and sleeplessness, among others. Assuming that drug makers’ entire increases were passed on to the payer, the average annual cost of therapy per prescription was $47 more in 2005 than in 2004.

Over the six years that AARP "Rx Watchdog" has monitored the industry’s pricing habits, the average annual cost of therapy with brand-name products used to treat chronic conditions increased $297. However, the typical older individual in America regularly takes four drugs so, assuming these are brand-name products, their annual cost of therapy rose almost $1,200 from the end of 1999 to the end of 2005.

Of the 24 most widely used brand-name drugs in the sample, the highest price increase, 11.1 percent, was applied to Toprol XL 50 mg tablets, a cardio-selective beta blocker manufactured by AstraZeneca. The lowest increase among these best sellers, 2.9 percent, was applied to Plavix 75 mg tablets, an antiplatelet medication made by Bristol-Myers Squibb.

Although prices continue to soar the report found a slight silver lining. The average annual brand-name drug increase in 2005 was substantially lower than the rates of increase in 2003 and 2004, and slightly lower than that of 2002.

The full AARP Public Policy Institute reports are available online at http://www.aarp.org/research/ppi/.

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. 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.

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