AARP Report: Prescription Drug Prices Maintained an Upward Trajectory in 2015

The Rx Price Watch report developed by Leigh Purvis, MPA, of the American Association of Retired Persons (AARP) and Stephen W. Schondelmeyer, PharmD, PhD, PRIME Institute, University of Minnesota, has found that retail prices of widely used brand name prescription drugs rose at a significantly faster rate than general inflation over the past decade. Specifically, in 2015, the retail prices for 268 drugs in this category saw an average price increase of 15.5%, while the general inflation rate was 0.1% during the same time period.

The report, “Trends in Retail Prices of Brand Name Prescription Drugs Widely Used by Older Americans, 2006 to 2015,” examined the price trends for the most commonly used branded prescription drugs in 2015. Additionally, the authors calculated the 10-year cumulative retail price changes for popular branded prescription drugs for the period between 2006 and 2015, and retail price changes for these drugs based on their therapeutic category and the manufacturer. The following are some of the report’s findings:

• Brand name prescription drug prices increase nearly 130-times faster than general inflation in 2015
• One specific brand name prescription drug, the authors report, which is used in the treatment of a chronic condition, almost cost an average $1000 higher annually in 2015 ($5800) than it did in 2014. The report estimated that for older Americans who might be on 4 to 5 prescription drug medications, the annual cost of treatment in 2015 could have been more than $26,000
• 113 chronic-use brand name drugs saw an average 188.7% increase in price between January 2006 and December 2015. Inflation during the same time period was up 19.4%, cumulative.
• Based on their findings from the 35 drug manufacturers included in the study, the authors concluded that brand name drug price trends are an industry-wide phenomenon.
• Nearly 98% of the 49 therapeutic drug categories in the study saw an average annual retail price increase of over 5% in 2015.

The authors wrote that an increase in the price of branded drugs always translates into an increase in out-of-pocket costs—particularly for consumers who have a coinsurance instead of copayment. Additionally, insurance companies compensate for the price increase by raising deductibles and premiums for enrollees. Overall, prescription drug price increases also impact taxpayer-funded programs like Medicare and Medicaid.

The report advices health policy experts to take note of this recent trend in pharmaceutical drug prices and focus their attention on ways to balance innovation with consumer health, and financial security.