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Rx Price Watch Report: Trends in Retail Prices of Prescription Drugs Widely Used by Older Americans: 2006 to 2015

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 2015. In 2015, retail prices for 768 brand name, generic, and specialty prescription drugs widely used by Medicare beneficiaries increased by an average of 6.4 percent. In contrast, the general inflation rate was 0.1 percent over the same period.

Increases in the retail price of prescription drugs have a corresponding impact on the cost of drug therapy for the individual and for all other payers. In 2015, the average annual retail cost of prescription drug therapy for one drug, based on the market basket in this study, was almost $13,000 per year. This average annual cost was four-fifths of the average Social Security retirement benefit ($16,101). It was also more than half of the median income for Medicare beneficiaries ($25,150) and almost one-quarter of the median US household income ($55,775) 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. If these trends continue, older Americans—particularly those on fixed incomes—will be unable to afford the prescription drugs that they need, leading 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.

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