The latest Rx Price Watch report by Leigh Purvis and Dr. Stephen W. Schondelmeyer finds that retail prices for widely used specialty prescription drugs increased, on average, between 2006 and 2013. In 2013, retail prices for 115 specialty prescription drugs widely used by Medicare beneficiaries increased by an average of 10.6 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 specialty drug, based on the market basket in this study, was $53,384 per year. This average annual cost was greater than the median US household income ($52,250). It was also more than twice the median income for Medicare beneficiaries ($23,500) and almost three and a half times higher than the average Social Security retirement benefit ($15,526) over the same time period.
Until recently, relatively few patients have used specialty drugs. However, there are strong indications that a much larger share of the population will use specialty prescription drugs in the future. If recent trends in specialty drug prices and related price increases continue unabated, an increasing number of older Americans will be unable to afford necessary specialty medications. Such developments will lead to poorer health outcomes and higher health care costs in the future.
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.