AARP Hearing Center
Brand-name drug prices have been increasing faster than the rate of general inflation for decades. This can be particularly challenging for Medicare Part D enrollees, who take an average of four or five prescription drugs every month and often face cost sharing that is directly affected by drug price increases. One in five older adults report engaging in cost-coping strategies such as not filling a prescription or skipping doses to save money on their prescription medications.
The analysis in this AARP Public Policy Institute Spotlight report is based on the 25 brand-name drugs with the highest total Medicare Part D spending in 2022 (“top 25 drugs”) that have not yet been selected for Medicare drug price negotiation, as reported in the Medicare Part D Spending by Drug Dashboard. Overall, these top 25 drugs were responsible for nearly $50 billion in total Medicare Part D spending in 2022 and were used by a total of more than seven million Part D enrollees.
The report finds that list prices for the 25 top Medicare Part D drugs not currently selected for Medicare drug price negotiation have increased by an average of 98 percent—or nearly doubled—since they first entered the market. These lifetime price increases often greatly exceeded the corresponding rate of general inflation.
It also found that, on average, more than 40 percent of the current list prices for the top 25 drugs is due to price increases that have occurred since the products first entered the market; such increases are typically not explained or justified. While the current analysis reflects a relatively small subset of brand-name prescription drugs, research indicates that the pricing trends found in this analysis are widespread.
These findings highlight the importance of provisions in the Inflation Reduction Act that allow the Medicare program to negotiate prescription drug prices and require drug companies to pay penalties when they increase their prices faster than the rate of inflation. Equally important, increased drug costs—if left unchecked—will prompt more older Americans to stop taking necessary medications, thus leading to poorer health outcomes and higher health care costs in the future.
