Prices on medications most commonly used by older people rose 4.3% in first half of 2006

Sep 22 2006

Manufacturer prices for the brand-name drugs most commonly used by individuals ages 50 and older increased by an average of 6.3% during the 12-month period ending in June, according to an AARP survey released on Tuesday, the Newark Star-Ledger reports (Cohen, Newark Star-Ledger, 9/20).

For the survey, AARP looked at manufacturers' list prices for the 193 brand-name drugs most commonly prescribed to people ages 50 and older. Between July 2005 and June 2006, the prices of those drugs outpaced the 3.8% inflation rate by roughly 60%, the survey finds (Lipman, Palm Beach Post, 9/20). During the same period, the manufacturers' list price for 75 commonly prescribed generic drugs increased an average of 0.4%, the survey finds (Reichard, CQ HealthBeat, 9/19). The brand-name prescription drug with the highest manufacturers' list price increase during the first six months of 2006 was Ambien, a sleeping aid manufactured by Sanofi-Aventis, according to the survey. The price for a five-milligram dose of Ambien increased 13.3%, the survey finds (Newark Star-Ledger, 9/20).

Price Moderation

The survey also finds that manufacturers' list prices for the brand-name drugs increased an average of 4.3% during the first half of 2006 -- roughly double overall inflation -- and increased by 0.5% between April and June. AARP said the slowdown during the second quarter of 2006 could be because price increases typically take effect at the start of the year (Freking, AP/Seattle Times, 9/20). According to the Star-Ledger, AARP said it was uncertain whether the price moderation is related to a normal drug price cycle or because of the Medicare prescription drug benefit (Newark Star-Ledger, 9/20). AARP Public Policy Institute Managing Director Dalmer Hoskins noted that the survey did not examine how the price increases affected consumers, adding that the prices consumers pay varies based on their insurance (Palm Beach Post, 9/20).

Comments

David Sloane, director of government relations for AARP, said millions of Medicare beneficiaries are saving money on prescription drugs because of the Medicare drug benefit, but he added that the gap in Medicare coverage known as the "doughnut hole" means that many beneficiaries still must pay out of pocket for their medications (Newark Star-Ledger, 9/20). AARP "urged the public to support" a bill (S 334) that would allow the U.S. residents to purchase medications from abroad, CQ HealthBeat reports (CQ HealthBeat, 9/19). Pharmaceutical Research and Manufacturers of America Vice President Ken Johnson said, "AARP's allegations about pharmaceutical inflation are inaccurate" (Newark Star-Ledger, 9/20). Johnson said prescription drug price increases "are at their lowest level in a decade," citing a report released by Milliman in September that finds prescription drug price increases have been consistent with overall medical inflation since the passage of the Medicare drug benefit in 2003 (Palm Beach Post, 9/20). Johnson added that legislation allowing consumers to purchase drugs from abroad would be dangerous (AP/Seattle Times, 9/20).

The AARP survey is available online. You must have Adobe Acrobat Reader to view the survey.

Democratic Analysis

In related news, Rep. Henry Waxman (D-Calif.) and other House Democrats released an analysis finding that drug industry profits increased by $8 billion during the first six months of the Medicare drug benefit, CQ HealthBeat reports (CQ HealthBeat, 9/19). The lawmakers said the increase in profits -- which they estimated at 27% -- was in part because of "the failure of private plans to negotiate lower prices," as well as "generally higher prices charged by the companies," the Star-Ledger reports (Newark Star-Ledger, 9/20). Johnson said that the analysis was "politically inspired," adding that the Medicare drug benefit "has improved the lives of millions of seniors." Johnson said that competition among private drug plans for Medicare beneficiaries has reduced average monthly premiums for drug coverage from $37 to $24 (CQ HealthBeat, 9/19).