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Brand name drug prices continue to climb dramatically

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( The average increase in the price manufacturers charge for brand name prescription drugs widely used by older Americans continued to substantially exceed the rate of general inflation through March 2005, according to the new AARP Rx Watchdog Report study released today. The report, Trends in Manufacturer Prices of Brand Name Prescription Drugs Used by Older Americans First Quarter 2005 Update, was prepared by the AARP Public Policy Institute (PPI) in conjunction with the PRIME Institute of the University of Minnesota as part of a continuing series of reports that regularly analyze prescription drug price trends.

The report presents two measures of price change. The first is the annual rate of change in manufacture drug prices (i.e. changes from April 1, 2004 through March 31, 2005). The second measure is the three-month percentage change in prices (i.e. changes from December 31, 2004 through March 31, 2005). The report states that while the average annual rate of price increase (6.6 percent for the 12-month period ending on March 31, 2005) was lower than for the twelve month period ending on December 31, 2004 (7.1 percent), the increase far outpaced the rate of general inflation, that of 3.0 percent.

AARPs CEO William Novelli said, We are very disappointed that brand name manufacturers have failed to keep their price increases in line with inflation and we will continue to educate our members and the public about how best to find the most affordable prescription drugs to suit their needs.

More than one-half of the drugs in the sample, 110 of 195, had increases in manufacturer price during the period from December 31, 2004 through March 31, 2005. As a result of this and increases in recent years, a typical older American (who takes three prescription drugs) is likely to have experienced an increase, on average, in the cost of therapy from the year 2000 through March 31, 2005 of $866.16 if the drugs are brand name products used to treat chronic conditions and the full price increases were passed along to the consumer.

A baseline study published in May 2004 by the AARP Public Policy Institute identified steady increases in the average annual manufacturer price of brand name prescription drugs from calendar year 2000 through calendar year 2003; a recent update reported a continuation of this trend through 2004.

A second report, Trends in Manufacturer List Prices of Generic Prescription Drugs Used By Older Americans First Quarter 2005 Update, states that manufacturer list prices for the sample of 75 generic drugs rose only by 0.7 percent in the 12-months ending on March 31, 2005. While this is a slight increase compared to the 12-month period ending on December 31, 2004, it represents a substantial slowing compared to the dramatic rates of increase for 2001 (7.8%), 2002 (15.8%), and 2003 (13.3%). Furthermore, the report states that in the first quarter of 2005, only three out of the 75 generic drugs in the sample had an increase in manufacturer list price.

AARP is helping states find ways to lower the cost of prescription drugs for their Medicaid and state drug assistance programs and continues to support legislation that will legalize the safe reimportation of prescription drugs from Canada and other countries. AARP also supports giving authority to the Secretary of the U.S. Department of Health and Human Services (HHS) to negotiate drug prices.

For more information about the studies, please visit AARPs website at:

AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, AARP Foundation is our affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

© Health News 2004 All Rights Reserved.

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