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’s picking up much of the tab for beneficiaries’ medicine.
“Unfortunately, many manufacturers 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 drugmakers, 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.
