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Two Recent
Studies Show Drug Prices for Seniors Spiraling Upward
June 11, 2004
Two studies released at the end of May show the prices for drugs most
often required by senior citizens are far outstripping inflation and
that even with the new Medicare discount cards seniors will probably pay
more for drugs this year than last. The study by Families USA also
identifies the drugs whose prices are rising the fastest. The AARP study
says senior drug prices increased more than twice as much as inflation
over the last four years.
The reports
from both organizations are below.
Families USA
Study Shows Senior Drug Prices Up 4.3 Times Inflation
Medicare Discount Cards Begins, But
Overwhelming Majority of Seniors
Will Be Left Behind With Higher Drug Costs
Washington, DC - The prices of the top 30
brand-name drugs prescribed for seniors rose by 4.3 times the rate of
inflation last year, according to a report released today by Families
USA, the national organization for health care consumers.
The report was issued only days before the new
Medicare drug discount card program begins. However, the report shows
that, even after the program is fully implemented, most seniors will pay
much higher prices this year than they have paid in previous years.
Based on the Bush Administration's estimates,
approximately 7.4 million seniors - only 1 out of every 6 people
enrolled in Medicare - will participate in the new drug discount card
program. As a result, 5 out of 6 seniors will bear the full brunt of the
fast-rising drug inflation documented in the report.
"The overwhelming majority of seniors will receive
no help this or next year from skyrocketing drug prices, and their
medicines will be much more unaffordable," said Ron Pollack, Families
USA's Executive Director. "For those who get discounts, potential
savings will be negated by large increases in base prices."
According to the report, the average wholesale
price of 28 of the top 30 brand-name drugs rose by 2 or more times the
rate of inflation from January 2003 to January 2004. Twenty-one of those
drugs rose in price by 3 or more times the rate of inflation, and almost
half (14) rose by more than 5 times inflation. The top 5 brand-name
drugs prescribed for seniors rose especially quickly:
> Lipitor, used to lower cholesterol, rose
5.5 times inflation.
> Plavix, used to prevent blood clots, rose
5.3 times inflation.
> Fosamax, used to treat patients with
osteoporosis, rose 4.6 times inflation.
> Norvasc, used to treat high blood
pressure, rose 6.6 times inflation.
> Celebrex, used to treat arthritis and
joint pain, rose 5.4 times inflation.
"Congress and the President could have provided
real drug price relief for all seniors had they allowed Medicare to
bargain for lower prices, like the Department of Veterans Affairs does
for veterans, and had they allowed seniors to purchase cheaper drugs
from Canada," said Pollack. "Instead, most seniors will experience even
more cost pain without the benefit of a palliative." [See
comparison chart.]
According to the Administrator of the Centers for
Medicare and Medicaid Services, seniors enrolled in the new discount
card program will experience brand-name drug discounts ranging from 11
to 17 percent. However, according to the Families USA report, during the
past three years (from January 2001 to January 2004), the base price of
the top 30 brand-name drugs rose, on average, by almost 22 percent.
Lipitor, the top-selling drug for seniors, rose by 27.0 percent in that
period. Plavix, the second most prescribed drug, rose by 34.8 percent.
During the past year, the brand-name drugs that
rose fastest were:
> Combivent, marketed by Boehringer
Ingelheim and used to treat chronic asthma, rose 13.2 times inflation.
> Alphagan P, marketed by Allergan to treat
glaucoma, rose 10.3 times inflation.
> Evista, marketed by Eli Lilly to treat
osteoporosis, rose 10.3 times inflation.
> Diovan, marketed by Novartis to treat high
blood pressure, rose 8.6 times inflation.
> Detrol LA, marketed by Pfizer to treat
overactive bladders, rose 8.5 times inflation.
> Xalatan, marketed by Pfizer to treat
glaucoma, rose 6.8 times inflation.
The Families USA report was compiled from data
provided by the Pennsylvania Pharmaceutical Assistance Contract for the
Elderly (PACE) program, the largest outpatient prescription drug program
for older Americans in the United States. Using PACE claims for 2003,
Families USA identified the 30 top selling brand-name drugs used by
seniors.
In calculating changes in drug prices, Families USA
examined the "Average Wholesale Price" (AWP). It is the single best
measure for reviewing price changes and is used by different payers and
discount vendors when negotiating with drug manufacturers. It is often
the base from which consumer discounts are calculated. Changes in AWP
signal changes in base prices charged to insurers and other payers and
changes in the price from which discounts are calculated.
For a copy of the report,
click here.
Drug Price Increases in 2003 Nearly Triple the Rate
of Inflation According to New AARP Study
Organization introduces two new tools to
understand drug pricing
May 25, 2004 - A new study released today by
AARP finds prices for those brand-name prescription drugs most
frequently used by older Americans and available in January 2000
increased, on average, a cumulative 27.6 percent over the four year
period 2000 to 2003 as compared to a general inflation rate of 10.4
percent.
This extensive retrospective study of prescription
drug pricing by the pharmaceutical manufacturersprice increases that
ultimately tend to be passed on to drug purchasersis the latest action
in AARP's campaign for affordable drugs. The study is one of two new
activities the Association unveiled today that will closely monitor the
pricing actions of the industry. The other is the "Rx
Watchdog Report," a consumer friendly newsletter that will inform
members and others about pricing issues as well as legislative and legal
actions focused on making drugs more affordable.
The study, published by the AARP Public Policy
Institute (PPI), tracks the prices of 197 of the most widely used
brand-name drugs in each year from 2000 to 2003. The study, "Trends
in Manufacturer Prices of Brand Name Prescription Drugs Used by Older
Americans, 2000-2003," found the gap widening between the average
manufacturers' price increase for brand name drugs and the rate of
general inflation. In 2003, the average annual manufacturer price
increase for the most widely used drugs was 6.9 percent; triple the rate
of general inflation of 2.2 percent.
Earlier this year, AARP asked the pharmaceutical
industry to hold its price increases to the rate of general inflation.
"Our request was appropriate given the price increases over the last
three years. Pricing clearly outstripped inflation. Because of these
findings, we will now issue quarterly reports on the drug pricing to
monitor the industry's performance," said AARP CEO Bill Novelli.
AARP's top priority this year is lowering
prescription drug costs, and the organization is engaged in a campaign
for affordable drugs that includes support of the legalization of drug
importation from Canada, where many brand name drugs are substantially
less expensive than in the United States.
"The new prescription benefit in Medicare was an
important step, but our members have made it clear that they want AARP
to continue to push for affordable drugs," said Novelli. "AARP's
periodic pricing studies will keep track of what the drug industry is
doing to keep drugs affordable while our newsletter will help consumers
better understand drug industry pricing and how to use medications more
wisely to save money and improve their health."
AARP's David Gross and Susan Raetzman, who
coauthored the PPI study with Professor Stephen Schondelmeyer of the
University of Minnesota, said the study found an upward trend in price
increases for brand name prescription drugs. In 2000, 23 percent of the
most-used brand name prescription drugs increased in price by more than
double the general inflation rate while in 2003, 87 percent of those
drugs saw price increases that were double the rate of general
inflation. "If the price of drugs keeps going up faster than inflation,
it will become more and more difficult for consumers, especially older
consumers, to be able to afford them," said John Rother, Director of
AARP's Office of Policy and Strategy.
AARP's other vehicle to monitor and report on drug
cost is "AARP Rx Watchdog Report" a periodic newsletter that will
monitor the activities of pharmaceutical manufacturers and will provide
information from experts on the comparative effectiveness of certain
drugs, legal developments and the beneficiary experiences with the
Medicare drug discount card.
AARP is a nonprofit, nonpartisan membership
organization dedicated to making life better for people 50 and over. We
provide information and resources; engage in legislative, regulatory and
legal advocacy; assist members in serving their communities; and offer a
wide range of unique benefits, special products, and services for our
members. These include AARP The Magazine, published bimonthly;
AARP Bulletin, our monthly newspaper; AARP Segunda Juventud,
our quarterly publication for Hispanic members; NRTA Live and Learn
for National Retired Teachers Association members; and our Web site,
www.aarp.org. We have staffed offices in all 50 states, the District
of Columbia, Puerto Rico, and the U.S. Virgin Islands.
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