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Drug Price Increases That Exceed Inflation Are Costing Medicare Part D Billions

This AARP Public Policy Institute Spotlight finds that total Medicare Part D spending on 50 top brand-name drugs was $38 billion higher between 2015 and 2019 than it would have been if drug manufacturers had not increased their prices faster than the corresponding rate of inflation.

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Our analysis also found that the vast majority of the top 50 sole-source brand-name drugs experienced annual price increases over the study period. On average, nearly 90 percent of the top 50 drugs had annual price increases that exceeded the corresponding rate of general inflation from the end of 2015 through 2019.

It is unclear whether the inflation-based rebates under consideration in Congress would lead to widespread changes in drug company pricing behavior. However, given the current prevalence and magnitude of annual brand name drug price changes, it is clear that even a small movement in the right direction will result in substantial savings over the status quo. 

Suggested citation: 

Purvis, Leigh. Drug Price Increases That Exceed Inflation Are Costing Medicare Part D Billions. Washington, DC: AARP Public Policy Institute, June 2021