In 2009 brand name drugs rose in price 8% – a year when the general inflation rate remained negative, according to an analysis by AARP (American Association of Retired Persons). Although the brand name industry criticizes AARP because it does not take into account rebates and discounts, AARP’s RX Price Watch report says such discounts hardly make any impact.

A brand name drug is a medication sold by a drug company under a trademark-protected name. Only that company can produce and sell the drug, because it holds the patent for it. As soon as that drug’s patent life has expired, others can produce drugs with the same active ingredients (known as generic drugs). For example, Viagra is the brand name for Sildenafil (the generic name), an erectile dysfunction drug (for men with erection problems).

AARP Executive Vice President John Rother, said:

For the first time, we know that brand name drug retail prices are growing just as quickly as manufacturer prices. These are increases that hit the wallets of every American, whether through their own health care bills or the costs of programs like Medicare and Medicaid.

Of the 217 brand name prescription medications in the report, only 6 did not go up in price more than the inflation rate for that year. All of the 25 top selling brand name medications went up in price; most of them by over 5%.

Flomax (0.4 mg capsules), a prostate drug, went up by a whopping 24.8% during 2009. In 2010 its patent life expired and generic versions came onto the market (in 2010). Flomax rose in price 92% during the five years leading up to the end of its patent life. The retail price for a one-year supply of Flomax 0.4 mg, which was $1,493 in 2009, rose by $827 between the end of 2004 and the end of 2009. It is notable that the majority of this increase took place in the two years before its patent expired in April 2010

Rother said:

Prescription drugs improve the lives of millions of Americans. But unless something is done to bring down their skyrocketing price increases, life-saving medicines will be out of reach for too many. The health care law made some progress by closing the Medicare doughnut hole, but Congress and the industry must bring more competition and transparency to the marketplace.

AARP says it is striving to bring prescription costs down, and to create a more competitive marketplace. Health care legislation enacted earlier this year should start closing the gap in 2011 “and provide people who fall into the gap this year with an extra $250 to help pay for their drug costs.”

AARP requests that lawmakers allow for the safe and legal importation of prescription medications from abroad. It would also like to see generic versions of biologic drugs come to market more rapidly. Medicare should be able to negotiate prescription medication prices directly with their manufacturers, says AARP. The report informs that:

Cumulatively, the average retail price increase for the 207 widely used brand name drug products that have been on the market from the end of 2004 through the end of 2009 was 41.5 percent, compared with 13.3 percent for general inflation – or more than 3 times the rate of general inflation.

AARP RX Price Watch report (PDF)

Source: AARP

Written by Christian Nordqvist