The latest Rx Price Watch report by Leigh Purvis and Dr. Stephen Schondelmeyer finds that retail prices for widely used brand name prescription drugs increased substantially faster than general inflation between 2006 and 2015, and that the difference between the rate of brand name drug price increases and the rate of general inflation has been widening. In 2015, retail prices for 268 brand name prescription drugs widely used by Medicare beneficiaries increased by an average of 15.5 percent. In contrast, the general inflation rate was 0.1 percent over the same period.
The study also found that the average annual cost for one brand name drug used on a chronic basis now exceeds $5,800. For the average older American taking 4.5 prescription drugs per month, this translates into an average annual cost of therapy of $26,000. This amount exceeds the median income of $24,150 for Medicare beneficiaries.
Even if patients are fortunate enough to have good health care coverage, higher prescription drug prices translate into higher out-of-pocket costs—especially for those who pay a percentage of drug costs rather than a fixed copayment—as well as higher premiums, deductibles, and other forms of cost-sharing.
Prescription drug price increases also affect taxpayer-funded programs like Medicare and Medicaid. Higher government spending driven by large price increases eventually affects all Americans in the form of higher taxes, cuts to public programs, or both.
These AARP Public Policy Institute reports are a continuation of our Rx Watchdog report series that has been tracking 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.