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10 Prescription Drugs With Excessive Price Increases
New AARP report finds price hikes of hundreds of common medications outpace inflation
Photo Illustration: AARP; (Source: Gallery Stock)
A new AARP report reveals that the prices of brand-name and specialty drugs that millions of Americans rely on for their health have continued to increase faster than inflation — in many cases, far faster. The latest findings underscore the importance of a provision in the new AARP-backed Rx law that penalizes big drugmakers for such outsize hikes.
Since 2004, AARP’s Public Policy Institute (PPI) has kept tabs on how much prescription drugs prices have increased. The latest “Rx Price Watch” report shows that retail prices for 943 commonly used drugs increased faster than the rate of general inflation every year from 2006 until 2020, the most recent year data is available. AARP’s analysis includes 260 brand-name drugs, 503 generic medications and 180 specialty prescriptions. Specialty drugs typically are among the most complex and expensive medications used to treat very serious illnesses.
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AARP’s latest report found, for example, that the price of Nerlynx, used to treat early stage breast cancer, increased by nearly 21 percent in 2020, while general inflation increased by 1.3 percent during that same period.
“Spending increases, driven by high and growing drug prices, will affect all Americans in some way,” the report says. “Those with private health insurance will pay more in cost sharing and higher premiums for their health care coverage. In addition, increased government spending on prescription drugs will ultimately lead to higher taxes and/or cuts in public programs.”
The Medicare Payment Advisory Commission, which advises Congress on the program’s finances, has consistently found that high prescription drug price increases are a major factor in the recent growth in what it costs Medicare to cover prescription drugs.
New drug law penalizes big price hikes
Under the 2022 prescription drug law, which AARP supported, drugmakers that raise their prices more than the rate of general inflation have to pay a penalty to Medicare for the amount of the price hike that exceeded inflation. Leigh Purvis, coauthor of the report and AARP’s prescription drug policy principal, says that the findings show “the magnitude of the price increases over time and how not allowing them to increase so dramatically can have a real, meaningful impact on the price of these products.”
The report finds that the average annual cost of commonly used drugs was $26,000 in 2020. The annual cost would have been $14,000 lower had drug prices not been allowed to increase faster than inflation. The large increases the report uncovered, Purvis said, more than offset many substantial price decreases among widely used generic drugs.
“This report tells us how much generics are having a positive impact on affordability,” Purvis says, adding that AARP is supporting a number of legislative proposals in Congress that would curb brand-name pharmaceutical company tactics that can keep generic versions of their products from being developed and available to Americans.
In December, the Centers for Medicare & Medicaid Services (CMS) identified 48 prescription drugs covered by Medicare Part B that saw prices rise faster than inflation. The makers of those drugs will be subject to penalty under the new Rx law.
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