Prescription drug prices for U.S. residents ages 50 and older increased at about twice inflation rate

Mar 8 2007

Manufacturers' prices for the 193 prescription drugs most commonly used by U.S. residents ages 50 and older increased at about twice the rate of inflation in 2006, according to an annual report released on Tuesday by AARP, Cox/Atlanta Journal-Constitution reports.

AARP found that manufacturers' drug prices on average increased by 6.2%, while the Consumer Price Index increased by 3.2%. According to the report, average drug prices since the end of 1999 have increased by nearly 54%, while overall inflation increased by 20% (Lipman, Cox/Atlanta Journal-Constitution, 3/7). The report found that the insomnia pill Ambien, manufactured by Sanofi-Aventis, had the highest price increase, up 30% in 2006. Prices for the respiratory drugs Combivent and Atrovent, both manufactured by Boehringer Ingelheim, had the next highest rates of growth, up 18% and 17%, respectively, in 2006, according to the report (Reuters, 3/6). David Sloane, senior managing director for government relations and advocacy at AARP, said, "Over time, escalating drug prices will make Medicare drug plans unaffordable for older Americans. One way to address high drug prices is to take full advantage of Medicare's bargaining power and allow Medicare to negotiate lower drug prices" (Cox/Atlanta Journal-Constitution, 3/7). He added, "We need to send a loud and clear message to the pharmaceutical industry that Americans cannot afford to continue to pay the highest prices for prescription drugs in the world" (Reuters, 3/6).

Industry Response
The pharmaceutical industry called AARP's report "inaccurate and misleading," citing data from CMS and the Bureau of Labor Statistics that show increases in prescription drug spending slowed for the sixth year in a row and retail drug prices increased by 1.5% in 2006. Ken Johnson, vice president of the Pharmaceutical Research and Manufacturers of America, said, "Expert data strongly suggest that AARP's numbers simply do not reflect the true amounts paid by seniors for their medicines. And they do not reflect the clear downward trend in prescription drug price growth" (Cox/Atlanta Journal-Constitution, 3/7).

The study is available online. Note: You must have Adobe Acrobat Reader to view the report.