Trends in Retail Prices of Generic Prescription Drugs Widely Used by Older Americans, 2006 to 2020

by Leigh Purvis, and Dr. Stephen Schondelmeyer (PRIME Institute, University of Minnesota), Public Policy Institute, August 24, 2023

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Report

Trends in Retail Prices of Generic Prescription Drugs Widely Used by Older Americans, 2006 to 2020 (PDF)

Prices for Widely Used Generic Drugs Increase Slightly in 2020 after Four Years of Substantial Price Drops (PDF)

On average, older Americans take 4.6 prescription drugs every month. Generic drugs have long been a means of helping consumers and third-party payers reduce prescription drug costs. While generic drugs now account for more than 90 percent of all retail prescriptions filled in the United States, they account for only 20 percent of total spending on prescription drugs. This report finds that, on average, retail prices for widely used generic prescription drugs declined between 2006 and 2020. The findings also highlight the unique pricing dynamics in the generic drug market when compared with those in the brand name drug market.

Overview of Findings

Between 2019 and 2020, retail prices for 503 widely used generic prescription drugs increased by an average of 0.5 percent. The general inflation rate increased by 1.3 percent over the same period.
The average annual cost for one generic medication used on a chronic basis was $679 in 2020. This represents a dramatic drop since 2016, when the average annual cost of therapy was almost two times higher ($1,336).
All but two of the 503 generic prescription drug products in the study’s market basket had retail price changes during 2020; 397 drug products (79 percent) had a price decrease, and the remaining 104 (21 percent) had a price increase.
- Four widely used generic drug products had retail price increases that were greater than 200.0 percent in 2020. One of these widely used generic drug products (hydrochlorothiazide 100-25 mg tablet, used to treat high blood pressure) had a retail price increase of more than 1,100 percent.
Between January 2006 and December 2020, retail prices for 56 chronic-use generic drugs that had been on the market since the beginning of the study period decreased cumulatively by an average of 38.7 percent.
- The cumulative general inflation rate in the US economy was 32 percent during the same 15-year period.
Thirty-five of the 46 drug manufacturer groups had weighted average generic drug price decreases in 2020. Weighted average annual prices increased for nine drug manufacturer groups—plus the “All Others” category—in 2020. One drug manufacturer group did not experience an average annual price change in 2020.
Forty-eight of the 59 therapeutic categories of generic drug products—including the “Other Therapeutic Agents” category—had an average annual retail price decrease in 2020, ranging from 0.3 percent to 80.8 percent.
Eleven therapeutic categories of generic drug products had an average annual retail price increase, nine of which more than tripled the rate of general inflation (1.3 percent).
- The therapeutic category with the highest generic drug price increase—angiotensin-receptor blocker (ARB)-diuretic combinations used to treat high blood pressure—had an average annual retail price increase of 205.5 percent in 2020.

The availability of economically competitive and lower-cost generic drugs will take on added importance as more brand name drugs and biologicals enter the market with unusually high prices. Equally important will be determining what is driving substantial retail price increases for some generic prescription drugs, as well as how these factors might be mitigated.

This report is the latest in the AARP Public Policy Institute’s Rx Price Watch series. Separate reports analyze price changes for widely used brand name and specialty drug products. The series also analyzes the price changes for an overall market basket (i.e., brand name, generic, and specialty drug products combined) to reflect the overall market impact of drug price changes.

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.

Suggested citation:
Purvis, Leigh, and Stephen W. Schondelmeyer. Rx Price Watch Reports. Washington, DC: AARP Public Policy Institute, August 24, 2023. https://doi.org/10.26419/ppi.00198.001

Previous Reports

2021

2019