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Branded drug prices increase faster than other costs
March 28th, 2011
WASHINGTON – Prices for branded prescription drugs rose at a faster rate than costs for other medical goods and services over the last four years, according to a federal report.
The Government Accountability Office (GAO) found that the “usual and customary” (U&C) price index for the top 100 commonly used drugs increased by an annual average of 6.6% from 2006 through the first quarter of 2010, compared with a 3.8% average annual increase in the consumer price index for medical goods and services. The analysis covered 55 brand-name medicines and 45 generic drugs.
“Drug prices have been rising well ahead of inflation,” comments Rep. Peter Stark (D., Calif.), ranking member of the House Ways and Means subcommittee on health. “This report reminds us that this is an area where we should be looking for savings for taxpayers and beneficiaries.”
The GAO says prices for the branded drugs rose by an annual average of 8.3%, while prices for the generics fell by 2.6% annually. When examining the 100 drugs by active ingredient (branded products and generics with the same active ingredient considered as the same drug), the GAO found that prices rose by about 2.6% a year.
According to the GAO, prescription drug spending in 2009 totaled about $250 billion, of which about 31% was spent by the federal government.
“We found that the average U&C price for the commonly used brand-name prescription drugs we reviewed increased about 6% per year from January 2000 through January 2007,” the GAO states. “Some media reports have suggested that prescription drug prices may have increased more during the debate leading up to passage of the Patient Protection and Affordable Care Act in March 2010 compared to other recent years.”
According to the study, the increase in the price index from the first quarter of 2009 through the first quarter of 2010 (before passage of health reform legislation last year) was 5.9%, less than the increase for the two preceding years but higher than in 2006.
“The report’s key finding shows prices have been increasing at a rate of 2.6% annually, which is lower than overall medical inflation,” notes John Castellani, president and chief executive officer of Pharmaceutical Research and Manufacturers of America (PhRMA). “Any analysis of prices must take into account the mix of brand and generic medicines that patients actually use. Nearly 80% of all prescriptions are filled with generic drugs. Reports that ignore this fact exaggerate drug price trends and miss the point that it is the innovators’ investments that lead to pioneering advances that improve patient care.”