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Prescription drug prices up 7 percent in 2004, according to AARP
By Kevin Freking
Associated Press Writer
WASHINGTON Š Wholesale prices for brand-name prescription drugs jumped an average of 7.1 percent in 2004, the largest increase in five years and more than twice the overall rate of inflation, the AARP said April 12.
By contrast, the price for generic drugs hardly budged, rising 0.5 percent after increasing an average 13.3 percent the year before.
AARP's annual Rx Watchdog Report tracked prices drug manufacturers charged wholesalers last year for about 200 prescription drugs and 75 generics popular with older Americans.
"Much more needs to be done to slow down spiraling drug pricing," AARP chief Bill Novelli said in a statement.
The news on generic drugs was welcome, but generics represent only about 10 percent of the market by dollar volume, the advocacy group said.
The Pharmaceutical Research and Manufacturers of America, the trade group representing drug manufacturers, said the AARP study was misleading on two counts.
First, it compares brand-name drug prices with general inflation, rather than medical inflation, the group said, using the analogy of comparing Pepsi to the overall economy rather than Pepsi to Coke.
When compared with medical inflation, prescription drug prices, including generics, rose about 4 percent versus 4.7 percent for other medical services, said Lori Reilly, the trade associationÕs deputy vice president for policy and research.
The trade group also said the AARP study relies on what is referred to as the wholesale acquisition price, which does not take into account rebates and discounts provided by the manufacturer. "ItÕs just not indicative of what people pay at the counter," Reilly said.
Reilly said the 4 percent increase cited by drug manufacturers is based on the consumer price index, which she said is the most accurate measure for what consumers actually pay.
In its report, the AARP said the 7.1 percent increase in brand-name drug prices follows 2003Õs 7 percent jump. Since the end of 1999, the average wholesale price of more than 150 popular brand-name drugs rose an average 35.1 percent, nearly three times the 13.5 percent inflation rate over that period, the report said. In 2004, inflation was 2.7 percent.
Among the 25 best-selling drugs on the market in 2003 and 2004, the sleep medication Ambien (10 mg. tablets) saw the largest price jump at 11.9 percent. Flomax, used to treat enlarged prostates (0.4 mg. capsules) rose the least at 1.5 percent, according to the report.
Rising prescription drug costs could give more ammunition to lawmakers seeking legislation that would allow the importation of U.S. made prescription drugs sold abroad.
"ItÕs high time for the Bush administration either to pressure the drug industry to lower its prices or to stop opposing legislation to import cheaper drugs from Canada and other industrialized nations," said Sen. Edward M. Kennedy of Massachusetts, the senior Democrat of the Senate Health Committee.
Other lawmakers want the federal government to negotiate drug prices on behalf of Medicare beneficiaries when a new prescription drug benefit kicks in next year. The current plan is to have insurance companies that provide the benefit negotiate on behalf of their clients.
"As guardians of taxpayer funds, we should at a minimum ensure that Medicare has the right to negotiate better prices on drugs for seniors," said Rep. John Dingell of Michigan, the senior Democrat on the House Energy and Commerce Committee.
Larry Neal, a spokesman for Republicans on the House Energy and Commerce Committee, said senior citizens have been helped by prescription drug discount cards and will be helped considerably when the new Medicare benefit kicks in this January.
"We took on the issue last year because there was plenty of room for legitimate concern, and we did something about it," Neal said. ŅSeniors are going to get dramatic improvements, and it looks like some Democrats may never forgive us."
The report was prepared by the AARP Public Policy Institute and the PRIME Institute of the University of Minnesota.
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