AARP reports US drug price increase in 2009

Retail prices for popular brand name drugs "skyrocketed" in the US by more than eight per cent last year in spite of a negative general inflation rate, according to the American Association of Retired Persons (AARP), the influential membership group for older Americans.

The AARP Rx Price Watch Report is the group's first-ever analysis of retail price trends for prescription drugs, although it has frequently issued reports on manufacturer prices for the drugs. AARP said the new report refutes manufacturers' claims that discounts and rebates offered by the industry protect consumers from the impact of rising manufacturer prices.

In fact, the increase for manufacturer prices in 2009 was 9.3 per cent and the increase in retail prices for the same drugs was almost as high, coming in at 8.3 per cent, AARP claims.

"The brand name drug industry has criticised AARP's past drug pricing reports for analysing manufacturer list prices that do not reflect discounts and rebates often provided by drugmakers," AARP executive vice president John Rother said in a statement. "For the first time, we know that brand name drug retail prices are growing just as quickly as manufacturer prices."

The report covers 217 brand name prescription drugs commonly prescribed to people who are enrolled in Medicare Part D and finds that prices for 211 of them grew faster than the general inflation rate last year. Most of the 25 top-selling brand name drugs had price increases of more than five per cent, and the price of Boehringer Ingelheim's prostate hyperplasia drug Flomax (tamsulosin) spiked by nearly 25 per cent.

The report singles out Boehringer Ingelheim and BTA Pharmaceuticals as being responsible for especially steep pricing increases, with average increases of over 15 per cent among the drugs included in the overview. Conversely, Merck, Allergan and Alcon were praised for having average increases of less than five per cent.

Pharmaceutical Research and Manufacturers of America (PhRMA) called the report "distorted and misleading" and pointed out that that AARP has a conflict of interest as the non-profit group is actually "one of the largest insurance providers in the US."

PhRMA said that independent analyses show that the growth rate for medicines in 2008 was the slowest since 1961, due largely to the number of prescriptions being filled with generics, a factor overlooked by the AARP report.

"AARP's report is 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," PhRMA senior vice president Rick Smith said.

"The report calculates costs in this inaccurate way even though it acknowledges that brandname drugs typically lose about 90 per cent of their sales after going generic. The result is an overstatement of consumers' actual costs for these medicines and there is a tremendous disparity between AARP's report and the numerous independent analyses showing drug costs growing slowly."