Drugs for Elderly More Costly, Study Finds

By Kevin Freking
Associated Press
Wednesday, March 5, 2008

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

The increase far exceeded inflation, continuing a longtime trend.

AARP said prices charged to wholesalers have been slightly higher since the Medicare drug benefit started on Jan. 1, 2006. Since then, the outcry over prices has diminished, with the government picking up much of the tab.

"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.

The wholesale prices of all but four of the 220 brand-name prescriptions in the study rose last year. Among the 25 most- popular drugs on the list, the sleep aid Ambien, by Sanofi-Aventis, had the largest price increase, 27.7 percent.

The price of Merck's cholesterol drug Zocor did not change in 2007, and the price of Bristol-Myers Squibb's blood thinner Plavix rose 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, and the plan's customers benefit.

The trade group representing drugmakers, the Pharmaceutical Research and Manufacturers of America, said AARP's numbers reflect neither the true amounts consumers pay for medicine nor a slowing in the growth of drug prices when taking into account generics.

Since 2000, prescription drug prices have increased more slowly than overall medical prices, said Ken Johnson, senior vice president of communications for the trade group.

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.

Government economists say about two-thirds of all prescriptions now are generics, a trend that federal officials say has accelerated because of the Medicare drug benefit.

"That's been the good-news story," Rother said. "The plans have done what we hoped they would do, which is shift people to lower-cost generic drugs. However, savings from people shifting to generics are being offset by these higher prices for brand names."

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