The prices of the brand-name prescription medications most used by senior citizens have climbed much faster than overall inflation in the last several years, a trend that undercuts the impact of the new Medicare drug discount card that takes effect next week, two consumer groups charged yesterday.
In a study tracking prices of 197 of the most widely used brand-name drugs from 2000 to 2003, AARP found a cumulative increase of 27.6 percent, compared to a general inflation rate of 10.4 percent.
In a separate analysis of prices of the top 30 brand-name drugs prescribed for seniors, Families USA found an average increase 4.3 times greater than the rate of inflation between January 2003 and January 2004.
Both studies examined prices charged to wholesalers, mail order firms and other groups that buy directly from drug manufacturers.
"The clear picture is that prices have been going up a lot, and we don't have any reason to believe these increases are not being passed on to consumers," said David Gross, co-author of the AARP study.
The price hikes raise the politically sensitive question of whether seniors will pay any less for medications this year with the Medicare cards, which promise discounts of up to 25 percent for brand-name drugs. All told, 73 cards are being offered by groups such as AARP and companies such as CVS Inc.
Medicare beneficiaries can use the cards to get reduced prices from retail or mail-order pharmacies. The program will disappear Jan. 1, 2006, when a more comprehensive drug benefit is implemented as part of the Medicare law passed by Congress in December.
Ron Pollack, executive director of Families USA, said yesterday the value of the discount cards has been significantly eroded by the price hikes.
"It's the functional equivalent of going to a used car salesman and being told you're getting a great deal because you got a $3,000 discount," he said. "Only before you came, he raised the price of the car by $4,000."
John Rother, who directs AARP's office of policy and strategy, agreed. "The discounts are important and significant," he said. "But, mapped against this pattern of price increases, the discounts really just offset the last three years of price increases."
Health and Human Services Secretary Tommy G. Thompson has dismissed suggestions that the discount cards will offer little relief. Thompson's spokesman, William Pierce, said yesterday that the two studies only prove the need for the cards.
"The prices of everything have gone up beyond the rate of inflation," he said. " . . . Take this into the real world and ask a person: If you can get 10 percent or 25 percent off today, do you want to? You can be angry as hell at the price of whatever you want to be angry at -- bread, beer, gas, drugs, doesn't matter. But if you can get a discount today, people are going to tell you 'I want it' every time."
Jeff Trewhitt, a spokesman for Pharmaceutical Research and Manufacturers of America, said the studies should have compared drug prices to the rate of medical -- instead of general -- inflation.
Between January 2001 and March 2003, Trewhitt said, the Consumer Price Index for pharmaceutical prices increased 4.4 percent, while overall medical inflation increased 4.6 percent. "This is a far more accurate way to look at price increases in the pharmaceutical industry," he said.
The AARP study reported steady price hikes over the past four years. In 2000, the average price increase for drugs was 4.1 percent, just above the 3.3 percent annual rate of general inflation. In 2003, price hikes for drugs accelerated to 6.9 percent, while the overall inflation rate dropped to 2.2 percent.
AARP officials said they are planning a similar study of generic drug prices.
According to Families USA, the prices of the five most-prescribed drugs for seniors increased at an especially fast rate last year. Lipitor, used to lower cholesterol, rose 5.5 times the rate of inflation; blood-clot preventer Plavix increased 5.3 times; osteoporosis drug Fosamax increased 4.6 times; blood-pressure medication Norvasc 6.6 times; and arthritis drug Celebrex 5.4 times.
Steep price increases appear to be continuing this year.
Merck & Co., for example, confirmed yesterday that in March it raised the price of Fosamax by 4.9 percent and the arthritis medication Vioxx by 4.8 percent.
Asked why Merck hiked the prices, company spokesman Tony Plohoros said: "Merck seeks to price its medicines competitively and based on the therapeutic value they provide patients. I'm not able to give you more detail than that. We certainly don't get into the specifics of the pricing of each product."
Earlier this year, AARP asked 14 drugmakers to hold price increases to the general rate of inflation. None agreed to do so, Rother said.
Sen. John F. Kerry (D-Mass.), the presumptive Democratic nominee, said yesterday the studies confirm "that the Medicare drug discount card is a fraud, and benefits the insurance and drug companies, not the millions of seniors who need relief."
Rep. Joe Barton (R-Tex.), chairman of the House Energy and Commerce Committee, told seniors at a Medicare forum in Texas yesterday: "You might never know about the benefits of the cards listening to some of the critics of the new program. Scaring seniors into not signing up for the savings they provide may advance the critics' own ideological agenda, but it does nothing to help beneficiaries."