Retail prices for widely used brand name prescription drugs increased substantially faster than general inflation in every year from 2006 to 2017. Between 2016 and 2017, retail prices for 267 brand name prescription drugs widely used by older Americans, including Medicare beneficiaries, increased by an average of 8.4 percent. In contrast, the general inflation rate was 2.1 percent over the same period. Brand name drug prices have routinely increased much faster than general inflation over the past 14 years-- the entire period during which the AARP Public Policy Institute has been publishing this report series. Increases in the retail price of brand name prescription drugs have a corresponding impact on the cost of therapy for the individual and for all other payers. In 2017, the average cost of therapy for a brand name prescription drug, based on the market basket in this study, was almost $6,800 per year. On average, older Americans take 4.5 prescription drugs every month. Consequently, an older adult who uses brand name prescription drugs is likely to have experienced an average annual retail cost of drug therapy of more than $30,000 in 2017. This amount exceeds the median annual income for individual Medicare beneficiaries of $26,200. Notably, the average annual cost of drug therapy for one brand name drug used on a chronic basis would have been more than $4,600 lower in 2017 ($2,178 v. $6,798) had their retail price changes been limited to the rate of general inflation between 2006 and 2017. If recent trends in brand name drug price increases continue unabated, the cost of drugs will prompt increasing numbers of older Americans to stop taking necessary medications. This will lead to poorer health outcomes and higher health care costs in the future.
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