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Rx Price Watch Report: Trends in Retail Prices of Brand Name Prescription Drugs Widely Used by Older Americans, 2006 to 2020

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The latest Rx Price Watch report by Leigh Purvis and Dr. Stephen W. Schondelmeyer finds that retail price increases for widely used brand name prescription drugs consistently exceeded the rate of general inflation between 2006 and 2020. In 2020, retail prices for 260 brand name prescription drugs widely used by older adults increased by an average of 2.9 percent. In contrast, the general inflation rate was 1.3 percent over the same period.

The average annual cost for one brand name medication used on a chronic basis was $6,604 in 2020, more than $1,500 higher than the average annual cost of therapy in 2015. For the average older American taking 4.7 prescription drugs per month, the annual cost of therapy would have been more than $31,000 for 2020—more than three and a half times the cost seen 15 years earlier. This amount exceeds the median annual income of Medicare beneficiaries ($29,650).

Notably, the average annual cost of drug therapy for one brand name drug used on a chronic basis would have been almost $3,700 lower in 2020 ($2,911 v. $6,604) if retail price changes had not exceeded general inflation between 2006 and 2020.

Spending increases driven by high and growing drug prices will affect all Americans in some way. Those with private health coverage will pay more in cost-sharing and higher premiums for their health care coverage. In addition, increased government spending will ultimately lead to higher taxes and/or cuts to public programs.

Policy makers interested in slowing brand name drug price increases should focus on changes that produce sustainable effects. While policy options should encourage meaningful pharmaceutical innovation, such options should be balanced with the need for improved health and the financial security of consumers and taxpayer-funded programs like Medicare and Medicaid.

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.

For more information, please contact the AARP Public Policy Institute at (202) 434-3890.

Suggested Citation:

Purvis, Leigh, and Stephen W. Schondelmeyer. Rx PriceWatch Reports. Washington, DC: AARP Public Policy Institute, June 2019

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