Retail prices for 267 brand-name drugs commonly used by older adults surged by an average of 5.8% in 2018, more than twice the general inflation rate of 2.4%, according to new AARP Public Policy Institute (PPI) data released today. The annual average cost of therapy for one brand-name drug ballooned to more than $7,200 in 2018, up from nearly $1,900 in 2006.
“There seems to be no end to these relentless brand-name drug price increases,” said Debra Whitman, Executive Vice President and Chief Public Policy Officer at AARP. “To put this into perspective: If gasoline prices had grown at the same rate as these widely-used brand-name drugs over the past 12 years, gas would cost $8.34 per gallon at the pump today. Imagine how outraged Americans would be if they were forced to pay those kinds of prices.”
Brand-name drug price increases have consistently and substantially exceeded the general inflation rate of other consumer goods for over a decade, according to the AARP PPI data.
If brand-name drug retail price changes had been limited to the general inflation rate between 2006 and 2018, the average annual cost of therapy for one brand-name drug would be a whopping $5,000 lower today ($2,178 vs. $7,202). The average senior takes 4 to 5 medications each month, and the current cost of therapy translates into an annual cost of more than $32,000, almost 25% higher than the median annual income of $26,200 for a Medicare beneficiary.
“While some people will undoubtedly see a slower rate of price increases as a sign of improvement, the reality is that there is absolutely nothing to stop drug companies from reverting back to double-digit percentage price increases every year,” said Leigh Purvis, Director of Health Services Research, AARP Public Policy Institute, and co-author of the report. “Americans will remain at the mercy of drug manufacturers’ pricing behavior until Congress takes major legislative action.”
To view the full report, visit Aarp.org/rxpricewatch.