Drug Prices Increase 50X Faster Than Inflation
Retail prices for 768 prescription drugs commonly used by older adults increased by an average of 6.4% in 2015, outpacing the general inflation rate of 0.1%. This is at least the 12th straight year of substantial retail price increases for prescription drugs, according to the latest in a series of AARP Public Policy Institute reports that began tracking drug prices in 2004.
The new “Rx Price Watch Report: Trends in Retail Prices of Prescription Drugs Widely Used by Older Americans, 2006-2015,” studied retail prices of a combined set of 268 brand name, 399 generic, and 101 specialty drugs widely used by older Americans, including Medicare beneficiaries, over ten years.
In 2015, the average annual cost of therapy for just one prescription drug was almost $13,000 for older adults. This cost was:
- Equal to 80% of the average Social Security retirement benefit of $16,101.
- More than 50% of Medicare beneficiaries’ median income of $25,150.
- Almost 25% of the median household income of $55,775.
“Year after year, drug price increases far outpace price increases for the other kinds of goods and services that consumers use every day,” said AARP Chief Public Policy Officer Debra Whitman. “These increases are simply unsustainable for everyone, including patients, employers, insurers, and taxpayer-funded programs like Medicare and Medicaid.”
Rx Price Watch Report Highlights
Based on the retail prices of 768 brand name, generic, and specialty drugs:
- The average annual cost for one widely-used prescription drug in 2015 ($12,951) was more than 3X the average annual cost for a widely-used prescription drug in 2006 ($4,202), the year Medicare implemented Part D.
- In 2015, the average annual cost of therapy for widely-used specialty drugs was $52,486compared with an average annual cost of $5,807 for widely-used brand name drugs and $523for widely-used generic drugs.
“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,” said Leigh Purvis, Director of Health Services Research, AARP Public Policy Institute, and co-author of the report.