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Drug Prices Climbing, AARP Says
By Kevin Freking
The Associated Press
Wednesday 05 March 2007
Brand-name medicines, mainly prescribed
to the elderly, rose 7.4 percent last year, group reports.
Washington - Drugmakers increased their prices last year by an average of 7.4
percent for brand-name medicines most commonly prescribed to the elderly, according
to the advocacy group AARP.
The increase was about 2.5 times overall inflation, continuing a long-standing
trend.
The advocacy group has tracked drug prices going back to 2002. Specifically,
it looks at the prices charged to wholesalers. It noted that the price increases
have been slightly greater since the Medicare drug benefit kicked in Jan. 1,
2006.
In the four years before the benefit's startup, wholesale prices rose between
5.3 percent and 6.6 percent a year, according to AARP's tracking.
AARP officials said the outcry over drug prices was quite strong when Congress
approved legislation establishing the drug benefit. Since the drug benefit began,
that outcry has diminished, thanks to the federal government picking up much
of the tab for beneficiaries' medicine.
"Unfortunately, many manufactures have taken the absence of an outcry
as a green light to go ahead and raise prices even more," said John Rother,
AARP's policy director.
All but four of the 220 brand-name prescriptions in the study had price increases
during 2007. Nearly all exceeded the rate of general inflation. Among the top
25 drug products, the sleep aid Ambien had the largest price increase, 27.7
percent. Ambien is manufactured by Sanofi-Aventis. On the other end of the spectrum,
Merck's cholesterol drug Zocor had no price change in 2007. Also, Bristol-Myers
Squibb's blood thinner Plavix had a price increase of 0.5 percent.
The manufacturer's wholesale price is the most substantial component of a prescription
drug's retail price. However, insurance companies, such as those that cover
Medicare beneficiaries, typically negotiate confidential rebates from the manufacturer,
which can be passed on to the customer. Plans could potentially negate a higher
wholesale price by negotiating a steeper discount or by lowering their reimbursement
rates to pharmacies.
Still, a change in the wholesale price generally leads to a similar percentage
change in the price of most prescriptions, AARP said.
The trade group representing drug makers, the Pharmaceutical Research and Manufacturers
of America, said AARP's numbers don't reflect the true amounts that consumers
pay for medicine. Nor do the numbers reflect a slowing in the growth of drug
prices when taking into account generics.
Since 2000, prescription drug prices, as measured by the federal government,
have increased more slowly than overall medical inflation, said Ken Johnson,
senior vice president for the trade group.
Johnson pointed to government figures that show prices increased 3.7 percent
annually for medicines versus 4.3 percent for overall medical inflation.
The government's price index for medicines includes a blend of brand-names
and generic drugs that represents what "consumers actually buy - rather
than the few selectively highlighted by AARP," Johnson said.
AARP planned to officially release its report today. While the report focused
on higher prices for brand names, federal health officials note that more people
are taking generic medicines. They say that trend has accelerated as a result
of the Medicare drug benefit. Insurance plans use tools, such as lower co-payments
for generics, to steer consumers to lower-priced medicines. Government economists
say about two-thirds of all prescriptions now are generics.
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