AARP said Wednesday that the gain in branded drug prices was nearly 130 times faster than the 0.1% inflation rate and marked the fourth-straight year of brand-name drug price increase.
What’s more, the study — titled “Rx Price Watch Report: Trends in Retail Prices of Brand Name Prescription Drugs Widely Used by Older Americans, 2006-2015” — revealed that the average annual cost for one branded drug used on a chronic basis now tops $5,800, almost $1,000 higher than the average annual cost of therapy in 2014, and several times more than nearly $1,800 in 2006.
That translates into an average annual cost of therapy of $26,000 for the average older American taking 4.5 prescription drugs monthly (54 per year), AARP said in the report, noting that this figure exceeds the $24,150 median income of Medicare beneficiaries.
“This new report once again highlights the high and unrelenting price increases that are shockingly common in the pharmaceutical market,” Debra Whitman, chief public policy officer at AARP, said in a statement. “What’s particularly remarkable is that these incredibly high price increases are still occurring in the face of the intense public and congressional criticism of prescription drug pricing practices.”
In collaboration with the PRIME Institute at the University of Minnesota, the AARP Public Policy Institute developed a market basket of 268 branded prescription drugs in widespread use by older Americans. The report analyzed retail price changes between 2006 and 2015 for the drugs in the market basket using data from the Truven Health MarketScan Research Databases
The medications included products in 49 therapeutic categories for common and often chronic health conditions, including high cholesterol, diabetes and hypertension.
The study found that retail prices rose for 97% of the 268 brand-name drugs in the market basket. In addition, the average annual retail price gain was more than two and a half times higher in 2015 (15.5%) than in 2006 (5.9%).
“Prescription drug therapy is not affordable when its cost exceeds the patient’s entire income,” commented report co-author Leigh Purvis, director of health services research for the AARP Public Policy Institute. “Even if patients are fortunate enough to have good health care coverage, high prescription drug costs translate into higher out-of-pocket costs — especially for those who pay a percentage of drug costs rather than a fixed co-payment — as well as higher premiums, deductibles and other forms of cost-sharing.”
Other findings in the AARP brand-name drug pricing study included the following:
- 90% of brand-name drug prices have more than doubled in 10 years.
- The average annual cost ($5,807) of branded prescriptions grew more than three times the average annual cost ($1,788) in 2006, the year that Medicare implemented the Part D program.
- Seven widely used branded medications had average annual retail price increases of over 50% in 2015.
- Five of the six drugs with the highest cumulative price gains over the study period were marketed by Valeant Pharmaceuticals. The retail price of Valeant’s anti-anxiety drug, Ativan 1-mg tablets, increased by 2,873% between 2006 and 2015.
Among the 93% (248 of 268) of branded drug products with annual retail price increases of over 5% last year, 74 saw prices rose by 5% to 9.9%; 45 were up by 10% to 14.9%; 83 climbed by 15% to 19.9%; and 46 escalated by 20% to as much as 1,096%.
“Prescription drug price increases affect all types of payers including individuals, employers, private insurers and taxpayer-funded programs like Medicare and Medicaid,” the report stated. “These spending increases, driven by high and growing drug prices, will affect all Americans in some way. Those with private health insurance will pay more in cost sharing and higher premiums for their health care coverage. In addition, increased government spending on prescription drugs will ultimately lead to higher taxes and/or cuts to public programs.”