Brand name drug price increases reach five year high

The average increase in the price manufacturers charge for brand name prescription drugs. significantly outpaced inflation for the fifth straight year according to a new AARP "Rx Watchdog Report" study released today. The report, "Trends in Manufacturer Prices of Brand Name Prescription Drugs Used by Older Americans-2004 Year-end Update," was prepared by the AARP Public Policy Institute (PPI) in conjunction with the PRIME Institute of the University of Minnesota as part of a continuing series of reports that regularly analyze prescription drug price trends.

The current "Rx Watchdog Report" study describes changes in the prices prescription drug manufacturers charged wholesalers in 2004 for 195 brand name prescription drugs widely used by Americans age 50 and older. The study found that the average price increase during 2004 was 7.1 percent.

Compared to the 2004 general inflation rate of 2.7 percent, the price hikes are the biggest one-year increase levied by brand name manufacturers in any of the past five years.

Since the end of 1999, manufacturers of 153 of these brand name drugs have raised their prices over two-and-a-half times the rate of general inflation. During that time, manufacturers' drug prices have increased 35.1 percent on average, compared to an inflation rate of 13.5 percent.

An AARP baseline study published in May 2004 identified accelerating increases in the average manufacturer price from calendar year 2000 through calendar year 2003; two updates reported continued price increases through the third quarter of 2004.

The study also reports on price changes for 24 of the 25 top selling brand-name drugs in 2003 that stayed on the market throughout 2004. All but one drug had manufacturer price increases that exceeded the 2004 rate of general inflation and 16 drugs had price increases at more than double that rate. The highest percentage increase was 11.9 percent for the sleep medication Ambient 10 mg tablets; the lowest was 1.5 percent for Flomax 0.4 mg capsules. Prilosec 20 mg,--a drug that is also available both in generic form and over the counter was the only drug not to experience a price increase in the year.

AARP CEO Bill Novelli said, "We are disappointed that brand name manufacturers have failed to keep their price increases in line with inflation despite consumer appeals for them to hold the line. Much more needs to be done to slow down spiraling drug pricing."

He added, "AARP is working to lower the cost of prescription drugs for all Americans. We have introduced evidence-based research to our members through the AARP website that will help patients choose the most cost-effective medication for their needs."

AARP is also helping states find ways to lower the cost of prescription drugs for their Medicaid and state drug assistance programs and the organization continues to support legislation that will legalize the safe reimportation of prescription drugs from Canada and other countries. AARP also favors giving HHS the authority to negotiate drug prices for Medicare if private health plans are unable to negotiate lower costs.

"We will continue to work with all parties involved in an effort to make prescription drugs more affordable for our members and every American seeking quality, affordable health care," Novelli said.

The one ray of good news comes from a companion report issued by PPI, "Trends in Manufacturer List Prices of Generic Prescription Drugs Used by Older Americans- 2004 Year-End Update", also conducted in conjunction with the PRIME Institute of the University of Minnesota. The report found that, on average, manufacturers' list prices for 75 generic drugs commonly used by Americans 50 and over only rose 0.5 percent in 2004, less than one-fifth the general inflation rate of 2.7 percent during the same period. This is a dramatic deceleration in the rate of increase from that of 2003, when the average rate of increase was 13.3 percent for generic manufacturer's prices. Copies of both reports may be found on the AARP website at aarp.org.

AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, www.aarp.org. AARP Foundation is our affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.