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AARP: Specialty drug retail pricing escalates

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Generic drug retail prices decrease, despite some steep hikes

WASHINGTON — Retail prices for specialty drugs widely used by older Americans has surged, while pricing for generic drugs has dipped despite sharp hikes for some medications, according to a pair of new AARP Public Policy Institute (PPI) reports.

For the specialty drugs examined in the study, retail prices jumped by an average of 9.6% between 2014 and 2015, the highest increase since at least 2006, AARP said. Meanwhile, results were somewhat mixed in the generis segment: Though retail prices declined overall in 2015, 11% of generic drugs experienced price gains, with some topping 100%.

In 2015, the average annual cost of therapy with one specialty drug was $52,486, over three times higher than the average Social Security retirement benefit ($16,101) and twice the median income ($25,150) for someone on Medicare, AARP noted.

Conversely, the average annual cost of therapy for one generic drug in 2015 was $523, down from $714 the year before.

Of the 11% of generic drugs which saw price hikes, all of the increases surpassed the rate of general inflation. Between 2010 and 2015, all but one of the 399 widely used generics in the AARP PPI study experienced at least one retail price increase. Some of the price rises were steep, exceeding 100%. AARP said two manufacturers upped the retail price of doxycycline hyclate, a commonly used generic antibiotic, by more than 1,000%, the highest price increase noted in the generic drug report.

“American families can’t afford to keep paying for prescription drugs that cost more money than their salaries,” AARP chief public policy officer Debra Whitman said in a statement. “These price increases are particularly hard on older adults, who take an average of 4.5 prescription drugs per month and often live on fixed incomes.”

For the two studies, AARP’s PPI and the PRIME Institute at the University of Minnesota developed market baskets to gauge retail price trends among specialty and generic drugs widely used by older Americans, including Medicare beneficiaries. The market baskets for the Rx Price Watch reports included 101 specialty drug products and 399 generic drug products. Using data from the Truven Health MarketScan Research Databases, the studies analyzed retail price changes between 2006 and 2015 for the products in each basket. Medications included products used to treat common and often chronic health conditions, including high cholesterol, diabetes, arthritis and hypertension.

Used to treat complex, chronic health conditions, specialty drugs often require special care in how they are administered to patients, as well as in how they are handled and stored, AARP noted. Many specialty drugs treat conditions common among older people, including rheumatoid arthritis, multiple sclerosis, and cancer.

Based on the retail prices of the 101 specialty drugs examined, the average annual increase in retail prices was 9.6% (2014–2015), compared with 8.9% the year before. In contrast, the general U.S. inflation rate was 0.1%.

The average annual cost of specialty drug therapy used on a chronic basis climbed by almost $35,000 between 2006 and 2015. And in 2015, the average annual price of therapy for specialty medications was nine times higher than the average annual price of therapy for branded drugs and 100 times higher than the average annual price of therapy for generic drugs.

One drug, HP Acthar Gel, was dropped from the specialty drug analyses because its sharp one-time retail price increase (over 1,300%) in 2007 distorted the overall trends, AARP reported.

According to the retail prices of the 399 generics studied, the average annual retail cost of generic drug therapy was about $2,350 in 2015, more than twice the figure in 2006, when the Medicare Part D program began. One widely used generic diabetes drug had a 450%-plus retail price increase in 2015. AARP said the average annual generic drug price fell 19.4% from 2014 to 2015.

“Generics drugs currently account for almost nine out of 10 prescriptions filled at the pharmacy but only a quarter of total drug costs,” stated generic report co-author Leigh Purvis, director of health services research for AARP’s PPI. “Given Americans’ long-standing reliance on these products for savings — as well as recent price trends for brand-name and specialty drugs — it is incredibly important that we identify and mitigate the factors behind recent generic drug price increases.”


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