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WASHINGTON — Retail prices for prescription drugs widely used by older Americans have risen more than 50 times faster than the inflation rate, an AARP analysis found.
For 768 prescription drugs commonly used by older adults, retail prices surged an average of 6.4% in 2015, outpacing the general inflation rate of 0.1%, according to the latest AARP Public Policy Institute report. AARP noted that the increase reflects at least the 12th straight year of sizable retail price gains for prescription drugs since the institute began tracking drug prices in 2004.
In 2015, the average annual cost of therapy for one prescription drug was nearly $13,000 for older adults, which was equal to 80% of the average Social Security retirement benefit of $16,101, more than half of Medicare beneficiaries’ median income of $25,150 and almost 25% of the median household income of $55,775.
The study, “Rx Price Watch Report: Trends in Retail Prices of Prescription Drugs Widely Used by Older Americans 2006-2015,” gauged retail prices of 268 branded, 399 generic and 101 specialty drugs widely used by older Americans, including Medicare beneficiaries, over 10 years.
Using data from the Truven Health MarketScan Research Databases, the Rx Price Watch Report analyzed prescription drug retail pricing changes between 2006 and 2015 for the combined market basket, which was created in collaboration with the PRIME Institute at the University of Minnesota.
For one widely used prescription drug in 2015, the average annual cost was $12,951, more than three times the $4,202 average annual cost for a widely used prescription drug in 2006, the year that Medicare implemented Part D.
By market basket, the 2015 average annual cost of therapy for widely used brand-name drugs was $5,807, compared with $523 for generic drugs and $52,486 for specialty drugs.
“Year after year, drug price increases far outpace price increases for the other kinds of goods and services that consumers use every day,” according to Debra Whitman, chief public policy officer for AARP. “These increases are simply unsustainable for everyone, including patients, employers, insurers and taxpayer-funded programs like Medicare and Medicaid.”
Two of the three market baskets in the Rx Price Watch Report had substantial price rises in 2015: branded drugs climbed 15.5% and specialty drugs were up 9.6%. Generic drug prices, the third market basket, fell 19.4% in 2015.
The AARP combined average annual increase in 2015 was lower than the growth rates of retail prices in 2011 to 2014, which ranged from 7% to 12.5%.
Of the 768 widely used drugs in the AARP combined market basket, 42% (322) were on the market for the entire 10-year period (the end of 2005 through the end of 2015). Cumulatively, the average retail price for these 322 drugs rose 182.9% over 10 years, compared with a 19.4% increase in general inflation.
AARP’s report noted that 68% of the drug products (219 of 322) on the market since the end of 2005 treat chronic conditions. The average annual retail cost of these medications for chronic diseases was $8,572 in 2015, an increase of $5,376 over the 2006 annual cost of $3,196.
“Given these trends in prescription drug price increases, we’re going to continue seeing more and more older Americans, especially those on fixed incomes, who’ll be unable to afford their prescription drugs,” observed report co-author Leigh Purvis, director of health services research for the AARP Public Policy Institute.
Citing the 2017 Medicare Trustees Report, the AARP study noted that health care spending hikes fueled by high and rising drug prices will affect all Americans in some way. “Those with private health insurance will pay higher premiums and/or cost sharing for their health care coverage,” the AARP report stated. “Similarly, spending by government health programs will grow faster than the tax-based revenue that supports them, leading to higher taxes and/or cuts to public health or other programs.”
