Brand Name Prescription Drug Cost on the Rise, May Lead to Higher Medical Bills

A recent study by the America Association for Retired Persons reveals that older Americans are using more brand-name prescription drug products.

As reported on in the New York Times, brand name drugs are often more costly than their generic counterparts, and this finding could signal a significant increase in the medical bills of many seniors.

The AARP report found that the cost of the 217 most common brand-name prescription drug products used by older Americans increased an average of 8.3 percent in 2009. This was the largest increase in the last five years.

The findings by the AARP are not uncontested, however.

Several officials in the prescription drug industry challenge the finding, saying select brand-name prices do not accurately reflect the fact that the use of lower priced generic drugs are on the rise. According to IMS Health, a research firm, approximately 75 percent of all prescriptions dispensed in the United States are generics.

In a broader survey of prescription drug prices, the industry claims that the price of prescriptions drugs increased by 3.4 percent in 2009. This survey was conducted by government for the official Consumer Price Index and includes both generic and brand-name drug prices.

Assistant professor of health policy at University of North Carolina, Chapel Hill, saw improvement in the AARP’s recent data, but still claims their report is flawed.

“It can easily be shown that branded prices are higher here than they are in other countries, but we have the lowest and the most competitively priced generic drugs in the world, and the generic share is going up rapidly … Just focusing on brands I think is unfair.”

Executive vice president for policy and strategy for the AARP, John C. Rother, stated that, “Brand-name retail prices have been accelerating year-to-year even when inflation has been nonexistent in the rest of the economy.”

Not all prescription drugs rose evenly this past year. The incontinence drug Flomax had the largest increase with a 24.8 percent rise in retail price last year. This puts a single Flomax pill at $4.09.

Over the past several years, the price of prescription drugs has been rising across the board. According to the AARP: drugs rose by:

When we look at the Bureau of Labor Statistics over the same years, which include the price of generics, the increases are much smaller:

The AARP says that it is important to focus on brand-name drugs because many older Americans rely on brand-name drugs for chronic illnesses.

The Pharmaceutical Research and Manufacturers of America, the industry trade group, claims that the growth for prescription medicines is historically low.

The study looked at by the Pharmaceutical Research and Manufacturers of America also reports that Medicare drug spending is much less than initially projected, in part due to generics.

Still, increased drug costs can become a financial issue for anyone facing chronic disease or needs regular medication. While generics offer cheaper alternatives, they aren’t always available. And regular costs like these can lead to someone filing Chapter 7 bankruptcy.

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