AARP says drug prices still ahead of inflation rate

WASHINGTON — Price increases for popular brand-name prescription drugs rose at twice the general rate of inflation for the year ended June 30, though the gap narrowed a bit, the AARP said Tuesday.

The lobbying group said the average price increase for 193 brand name drugs amounted to 6.1 percent. Meanwhile, the overall inflation rate was 3 percent for the year.

"It's moving in the right direction, I will say that," said John Rother, AARP's director of policy and strategy. "But this is the sixth year in a row of price increases that are at least twice the rate of inflation, so it has a cumulative effect that I think is pretty serious."

The drugs that the AARP tracked are those most widely prescribed to people age 50 and older.

Pharmaceutical companies take issue with the AARP's comparison of drug prices to overall inflation. They say the more appropriate comparison is to medical inflation as measured by the Consumer Price Index.

The CPI indicates that medical inflation increased at an annual rate of 4.2 percent between July 2004 through June 2005, while drug prices, including generics, went up about 3.4 percent, a spokesman for the pharmaceutical industry said.

"Experts tell us that AARP's numbers simply do not reflect the true amounts paid by seniors for their medicines," said Ken Johnson, senior vice president of The Pharmaceutical Research and Manufacturers of America.

"Unfortunately, AARP seems more interested in getting headlines than in helping America's seniors."

The AARP and the University of Minnesota track the prices that drug manufacturers charge to wholesalers, which, in turn, sell to retail pharmacies. When wholesalers pay more, that cost is generally passed on in the retail price.

The AARP also tracked the 75 most popular generic medicines and found only a 0.9 percent price increase for the year ending June 30.

Prices for brand-name drugs routinely rise more quickly than generics. The most popular brand names rose at a rate of about 7 percent in 2003 and 2004. Meanwhile, overall inflation during those two years came to 2.3 percent and 2.7 percent, respectively.

During the first six months of 2005, the stiffest percentage increases in manufacturer price were for Atrovent, a drug used to treat bronchitis and emphysema, 18.6 percent; Ambien, a drug used to help people sleep, 14.4 percent; and Pletal, a drug that treats leg pain, 10 percent.

Rother said the new prescription-drug benefit that kicks in Jan. 1 should help more senior citizens afford brand-name drugs. He said the AARP would continue reporting drug-pricing changes in the hope that it would pressure companies to reconsider price increases.

"What good is it to manufacture drugs that can keep people healthy if people can't afford them?" he said.