Drug Prices for Elderly Surge Ahead in America

For the third consecutive year, the average prices of dozens of brand-name prescription drugs widely used by elderly Americans have risen more than twice as fast as general inflation, according to a survey released Tuesday by the advocacy group AARP.

The 12-month average increase for 195 drugs was 6.6 percent, or more than double the 3.1 percent rise in the Consumer Price Index that tracks general inflation.

Also in line with the trend in recent years, there was little inflation less than 1 percent in the average price of generic drugs, said the group, which represents older Americans.

Stephen Schondelmeyer, a University of Minnesota drug price specialist who analyzed wholesale drug prices for the AARP survey, said the price increases underscored the big burden the federal government will be taking on in January, when Medicare benefits will be expanded to include prescription drugs.

Consumer groups, including AARP, have been trying to persuade Congress and the Bush administration to use Medicare’s vast purchasing power to bargain directly with drugmakers on prices. Under the 2003 law that set up the new drug benefit, Medicare is currently barred from such negotiating, but must accept prices negotiated by insurers, drugstore chains and pharmacy benefit managers which individually lack Medicare’s clout.

Drugmakers, Schondelmeyer said, “want to manage their prices, and they might as well start from as high a point as they can.”

Ken Johnson, a spokesman for the drug industry, criticized the AARP numbers, saying they were based on wholesale prices and “do not reflect the true amounts paid by seniors for their medicines.” Johnson, a senior vice president of the Pharmaceutical Research and Manufacturers Association, said actual overall drug prices were not rising as fast as general inflation, once rebates and discounts arranged by insurers were taken into account.

But Dee Mahan, a health policy specialist with Families USA, a consumer advocacy group, said wholesale prices were “a valid thing to look at” because increases at the wholesale level were typically passed along to purchasers after discounts were subtracted.

Ann Smith, a spokeswoman for Medco Health Solutions, said the 6.6 percent wholesale price increases were “generally what we are also seeing.”

The difference in inflation between name-brand and generic drugs is illustrated by statins drugs used to lower cholesterol. Early this year Pfizer raised the wholesale price 5 percent for Lipitor, the best-selling statin, to $2.17 each for 10-milligram pills and $3.15 each for 20-milligram pills.

But there was no increase in the $1.18 wholesale price for several generic versions of Mevacor, an older statin.

More than half the drugs in the sample, 110 of 195, had increases in manufacturers’ wholesale prices in the first quarter of 2005. For a typical older American who regularly takes three brand-name prescription drugs for a chronic condition, the price for a year’s worth of those drugs would probably have increased $866, on average, since 2000, AARP said.