Brand-name drugs show huge price increases

Home/Reports | Posted 22/04/2011 post-comment0 Post your comment

In a new report produced by the AARP’s (American Association of Retired Persons) Public Policy Institute it was found that average retail price increases for brand-name prescription drugs in the US have far outstripped price increases for other consumer goods and services between 2005 and 2009.

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In 2009, the average annual increase in retail prices for 217 brand name prescription drugs widely used by Medicare (healthcare insurance) beneficiaries was notably higher at 8.3% compared to rates of 6.0–7.9% during 2005 to 2008. In contrast, in 2009 the rate of general inflation was a mere -0.3%.

Generics, on the other hand had a 2.6% annual drop in price during the same period.

The report, which is part of the AARPs Rx Price Watch series, shows that average annual increases in retail prices charged for widely used brand name prescription drugs have continued to consistently exceed the rate of general inflation since initiating their studies in 2004.

‘On average, retail prices for 207 brand name drugs that have been on the market since the beginning of the study (December 2004) increased 41.5% over the last five years (2005-2009), whereas the general inflation rate rose by only 13.3% over the same period’ according to AARP report.

Not surprisingly the pharmaceutical industry is now criticising AARP’s new study. The Pharmaceutical Researchers and Manufacturers of America (PhRMA) stated that the AARP had released ‘a distorted and misleading report that doesn’t paint an accurate picture of prescription drug spending in the US’ adding that ‘the growth rate for medicines in 2008 was the slowest since 1961’.

Senior Vice President of PhRMA, Mr Rick Smith, commented on the report saying that it was ‘misleading because nearly half of the drugs on its top 25 brand-name drug list were filled as generics in the first part of 2010, but AARP counts these drugs as if they were brand-name drugs, … even though it acknowledges that brand-name drugs typically lose about 90% of their sales after going generic. The result is … tremendous disparity between AARP’s report and the numerous independent analyses showing drug costs growing slowly’.

PhRMA insists that, to the contrary of the AARP report, drug spending increased by 3.4% over the same period as the AARP report according to the Consumer Price Index and was only 3.2% between 2007 and 2008 according to Medicare data.

Editor’s Comment

Whatever the true facts, what cannot be disputed is the fact that generics are definitely the cheaper option.

Please feel free to share your thoughts via email to or in the comments section below. What is your experience with price increases for brand name medicines? Do you think the AARP report reflects reality or is the pharma industry right to object?

Source: AARP, PhRMA

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