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AARP Report Finds Seniors' Drug Costs Rising

Drug prices 'exploded' after Medicare Part D began

March 5, 2008

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Food and gasoline aren't the only prices going up. Prices of 220 brand name prescription drugs most commonly used by people in Medicare Part D have surged since the drug benefit was implemented in 2006, according to AARP.

The seniors' group said it has studied drug prices since 2002 and reported the findings in a series of Watchdog reports. The latest report expands on the series by focusing its analysis on those brand prescription drugs most widely used by people enrolled in Medicare Part D.

The Watchdog report, which was produced by AARP's Public Policy Institute (PPI), found that prices of brand name drugs most commonly used by people in Medicare Part D rose by an average of 7.4 percent in 2007 – nearly two and a half times the rate of general inflation.

The report concludes that rising prices threaten consumers by increasing the likelihood of higher insurance premiums and the chance that people will fall into the Medicare coverage gap, and increasing the out-of-pocket expenses of those who find themselves in this "donut hole."

"Medicare Part D is helping millions of people afford their prescription drugs, but as brand name drug costs continue to soar more needs to be done to keep drugs affordable," said John Rother, AARP Director of Public Policy. "The Medicare Part D benefit helps more people afford their prescription drugs. But we must make greater progress in putting downward pressure on drug prices."

Costs 'explode'

The average treatment cost exploded from $80 per year per prescription in 2002, to $151 in 2007, according to the report.

A person who took three brand name prescriptions to treat a chronic condition over this period saw an increase in their yearly costs of more than $1,600 between 2002 and 2007. The study found brand name drug prices increased far greater than general inflation since 2002, with dramatic spikes since 2006, the period when Medicare Part D was implemented.

"This report raises questions about why the pharmaceutical companies so dramatically increased the costs of popular brand name drugs at the same time Medicare began offering drug coverage," said Rother. "When pharmaceutical companies raise wholesale prices, consumers are ultimately stuck with the bill.

"In the meantime, our elected leaders need to find sustainable solutions to the skyrocketing costs of drugs that are squeezing government programs like Medicare, employer-sponsored health plans, and individual consumers."

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