The latest Rx Price Watch report by Leigh Purvis and Dr. Stephen W. Schondelmeyer finds that retail prices for widely used prescription drugs increased, on average, between 2006 and 2013. In 2013, retail prices for 622 brand name, generic, and specialty prescription drugs widely used by Medicare beneficiaries increased by an average of 9.4 percent. In contrast, the general inflation rate was 1.5 percent over the same period.
Increases in the retail price of specialty prescription drugs have a corresponding impact on the cost of drug therapy for the individual and for all other payers. In 2013, the average annual retail cost of prescription drug therapy for one drug, based on the market basket in this study, was over $11,000 per year. This average annual cost was almost three-quarters of the average Social Security retirement benefit ($15,526). It was also almost half of the median income for Medicare beneficiaries ($23,500) and more than one-fifth of the median US household income ($52,250) over the same time period.
The findings of this report are attributable entirely to drug price growth among brand name and specialty drugs, which more than offset often substantial price decreases among generic drugs. More importantly, the recent acceleration in overall prescription drug price growth could be an indication that we can no longer rely on lower-priced generics to counterbalance the price trends seen in the brand name and specialty prescription drug markets.
These AARP Public Policy Institute reports are a continuation of our Rx Watchdog report series that has been tracking manufacturer price changes for widely used prescription drugs since 2004. The Rx Price Watch reports utilize retail prices - or the amount charged to consumers (and/or insurers) - as our primary data source. The reports are based on drugs widely used by older Americans.
For more information, please contact the AARP Public Policy Institute at (202) 434-3890.