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Drug Prices Skyrocketed During Last Decade: GAO

January 12, 2010

Prices for hundreds of brand-name drugs have skyrocketed since the beginning of the decade, particularly those used to treat infections, heart disease and depression, according to a report released Monday by the U.S. government.

“From 2000 to 2008, 416 brand-name drug products “” different drug strengths and dosage forms of the same drug brands “” had extraordinary price increases,” read the report by the nonpartisan General Accountability Office (GAO).

“These 416 brand-name drug products represented 321 different drug brands,” said the GAO, the investigative arm of Congress.

Prices for these drugs increased by 100 to 499 percent, and in some cases by more than 1,000 percent, from 2000 to 2008, the GAO said.

Additionally, the number of drug price increases more than doubled during that time more than doubled, with most drugs holding their higher prices over time.

“Almost 90 percent of all brand-name drug products that had an extraordinary price increase sustained the new higher price “” by either having another increase in price or remaining at the increased price,” the GAO said.

“The majority of all extraordinary price increases were for drugs priced less than $25 per unit; however, a full course of treatment for some of these drugs could total several thousand dollars,” the report read.

The report coincides with efforts by lawmakers to reconcile Senate and House versions of sweeping legislation to overhaul the nation’s healthcare system. 

Critics say both versions are too lenient with the pharmaceutical industry, and don’t go far enough in controlling drug costs.  Some members of Congress are also concerned that drug makers such as Pfizer and Merck raised prices of some drugs in anticipation of passage of healthcare reform legislation.

Last June, pharmaceutical companies made an $80 billion, 10-year deal with Senate Democrats and the Obama administration that could limit concessions from the $315 billion industry.  In return, the drug makers agreed to pay millions in taxes and help lower prices for some seniors in the Medicare prescription drug program.

Senators Charles Schumer (D-NY) and Amy Klobuchar (D-MN) had requested the current GAO analysis, and said it illustrates that further work needs to be done in reigning in drug costs — including allowing the federal government to negotiate prices.

“This is further proof that Medicare should be allowed to negotiate drug prices, just as the Veterans Administration does. It would help save taxpayers a lot of money,” Reuters quoted Klobuchar as saying.

The Pharmaceutical Research and Manufacturers of America (PhRMA) criticized the GAO report, saying it focused only on a “small number of selected brand medicines rather than the entire prescription drug market.”

The GAO acknowledged that the number of products that saw increases represent only about half of 1 percent of all brand-name drug products.

Roughly half of the price increases were in products repackaged in smaller doses for use by hospitals or physicians, the office said.

It is not yet clear what changes the pharmaceutical industry will see in the final version of the healthcare reform bill. PhRMA has said it supports the Senate version of the bill over the House version, which would cost the drug companies more.

President Obama has said he expects to sign a final version of the bill before his State of the Union speech in early February.

Other analyses into drug prices are pending, including an additional GAO report requested by House Democrats and a review by the Department of Health and Human Services inspector general requested by Senator Bill Nelson (D-NE)

The full GAO report can be viewed at http://www.gao.gov/new.items/d10201.pdf