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AARP Report Says Brand Name Drugs Spiked Up in Price

Janice Simmons, for HealthLeaders Media, May 19, 2010

The average manufacturer price increases for popular name brand and specialty prescription drugs used by Medicare beneficiaries rose faster than other consumer goods and services in the 12 months ending March 2010, according to a report from AARP's Public Policy Institute.

On the other hand, average manufacturer prices for well-known generic drugs fell during that same time period. These combined trends resulted in an average annual rate of increase of 5.3% for manufacturer drug prices during the 12-month period—despite a low general inflation rate, according to the AARP Rx Watchdog Report.

Overall, consumers saw a 9.7% rise in brand name drug prices over the 12-months: This rise was the largest 12-month spike since AARP began tracking drug prices in 2002, the report said. In comparison, inflation during the same period remained nearly flat at 0.3%.

AARP's Public Policy Institute also found that prices for specialty drugs—a group of drugs which includes biologic and injected drugs that are often used by Medicare beneficiaries to treat cancer, multiple sclerosis, and other serious chronic conditions—climbed 9.2%, or nearly as fast as brand name drugs. Specialty drug costs can range in cost from $1,000 to more than $20,000 per month.

Of the top 25 brand name drugs reviewed by AARP, the drugs showing the biggest increases in price during the 12-month period were a 27.6% price hike for Boehringer Ingelheim's prostate drug Flomax; a 15.6% hike for AstraZeneca's antipsychotic drug Seroquel; and a 13.9% rise for Eisai's Alzheimer's disease drug Aricept.

The prices of generic drugs, though, fell by 9.7% during the 12 months. The average annual cost of therapy for a person taking three generic medications, for instance, decreased by $51 during one-year period, compared with a $706 increase experienced by a person taking three brand name prescriptions, according to the report.

"Generic drugs have long been a bright spot among the dark clouds, with prices falling nearly as quickly as brand names are rising," said AARP Executive Vice President John Rother.

The report also noted that the new healthcare reform legislation has provisions that will eliminate Medicare Part D coverage gap through discounts on brand name, biologic, and generic prescription drugs. However, Part D enrollees will "continue to be exposed to the effects of the doughnut hole until the legislation's provisions are fully implemented in 2020."

In response to the report, the Pharmaceutical Research and Manufacturers of America called it "misleading" since it didn't incorporate discounts and rebates that drugmakers often negotiate with payers.


Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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