[Ip-health] Drug Prices Climbing, AARP Says (2.5 times inflation)

[Riaz K Tayob]

Snip:

The increase was about 2.5 times overall inflation, continuing a
long-standing trend.

Snip:

All but four of the 220 brand-name prescriptions in the study had price
increases during 2007. Nearly all exceeded the rate of general
inflation. Among the top 25 drug products, the sleep aid Ambien had the
largest price increase, 27.7 percent. Ambien is manufactured by
Sanofi-Aventis. On the other end of the spectrum, Merck's cholesterol
drug Zocor had no price change in 2007. Also, Bristol-Myers Squibb's
blood thinner Plavix had a price increase of 0.5 percent.


 Drug Prices Climbing, AARP Says
    By Kevin Freking
    The Associated Press

    Wednesday 05 March 2007

    Brand-name medicines, mainly prescribed to the elderly, rose 7.4
percent last year, group reports.

    Washington - Drugmakers increased their prices last year by an
average of 7.4 percent for brand-name medicines most commonly prescribed
to the elderly, according to the advocacy group AARP.

    The increase was about 2.5 times overall inflation, continuing a
long-standing trend.

    The advocacy group has tracked drug prices going back to 2002.
Specifically, it looks at the prices charged to wholesalers. It noted
that the price increases have been slightly greater since the Medicare
drug benefit kicked in Jan. 1, 2006.

    In the four years before the benefit's startup, wholesale prices
rose between 5.3 percent and 6.6 percent a year, according to AARP's
tracking.

    AARP officials said the outcry over drug prices was quite strong
when Congress approved legislation establishing the drug benefit. Since
the drug benefit began, that outcry has diminished, thanks to the
federal government picking up much of the tab for beneficiaries' medicine.

    "Unfortunately, many manufactures have taken the absence of an
outcry as a green light to go ahead and raise prices even more," said
John Rother, AARP's policy director.

    All but four of the 220 brand-name prescriptions in the study had
price increases during 2007. Nearly all exceeded the rate of general
inflation. Among the top 25 drug products, the sleep aid Ambien had the
largest price increase, 27.7 percent. Ambien is manufactured by
Sanofi-Aventis. On the other end of the spectrum, Merck's cholesterol
drug Zocor had no price change in 2007. Also, Bristol-Myers Squibb's
blood thinner Plavix had a price increase of 0.5 percent.

    The manufacturer's wholesale price is the most substantial component
of a prescription drug's retail price. However, insurance companies,
such as those that cover Medicare beneficiaries, typically negotiate
confidential rebates from the manufacturer, which can be passed on to
the customer. Plans could potentially negate a higher wholesale price by
negotiating a steeper discount or by lowering their reimbursement rates
to pharmacies.

    Still, a change in the wholesale price generally leads to a similar
percentage change in the price of most prescriptions, AARP said.

    The trade group representing drug makers, the Pharmaceutical
Research and Manufacturers of America, said AARP's numbers don't reflect
the true amounts that consumers pay for medicine. Nor do the numbers
reflect a slowing in the growth of drug prices when taking into account
generics.

    Since 2000, prescription drug prices, as measured by the federal
government, have increased more slowly than overall medical inflation,
said Ken Johnson, senior vice president for the trade group.

    Johnson pointed to government figures that show prices increased 3.7
percent annually for medicines versus 4.3 percent for overall medical
inflation.

    The government's price index for medicines includes a blend of
brand-names and generic drugs that represents what "consumers actually
buy - rather than the few selectively highlighted by AARP," Johnson said.

    AARP planned to officially release its report today. While the
report focused on higher prices for brand names, federal health
officials note that more people are taking generic medicines. They say
that trend has accelerated as a result of the Medicare drug benefit.
Insurance plans use tools, such as lower co-payments for generics, to
steer consumers to lower-priced medicines. Government economists say
about two-thirds of all prescriptions now are generics.

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