A ARP PUBLIC POLICY INSTITUTE SEPTEMBER 2019 Rx Price Watch Rx Price Watch Report: Price Growth for Brand Name and Specialty Drugs More Tan Ofset Price Decreases for Generic Drugs Stephen W. Schondelmeyer Leigh Purvis PRIME Institute, University of Minnesota AARP Public Policy Institute In 2017, retail prices for a combined set of 754 • Almost one-third of the median US household widely used prescription drugs (brand name, income ($60,336). generic, and specialty) increased by an average of 4.2 percent; in contrast, the general infation rate The average price of therapy for the AARP was 2.1 percent over the same period. combined market basket greatly exceeded the average price of therapy for the brand name The average annual increase in retail prices for the and generic market baskets. The higher price of AARP combined set of drug products exceeded the therapy for the combined market basket is due to corresponding rate of general infation every year from the markedly higher price level of specialty drug 2006 through 2017. These fndings are attributable products. In 2017: primarily to drug price growth among brand name and specialty drugs, which more than ofset often • The average annual cost of therapy for widely substantial price decreases among generic drugs. used brand name drug products was $6,798, In 2017, the average annual cost for the widely used • The average annual cost of therapy for widely prescription drugs used in our analysis was almost used generic drug products was $365, and $20,000 per drug per year. This cost was: • The average annual cost of therapy for widely used specialty drug products was $78,871. • Nearly 20 percent higher than the average Social Security retirement beneft ($16,848), Notably, the average annual cost of drug therapy • More than three-quarters of the median income for one drug used on a chronic basis would have for Medicare benefciaries ($26,200), and been more than $12,500 lower in 2017 (i.e., $7,263 v. A ARP PUBLIC POLICY INSTITUTE SEPTEMBER 2019 The Average Annual Cost of Widely Used Prescription Drugs Would Be Substantially Lower if Retail Price Changes Were Limited to General Inflation Note: Calculations of the average annual prescription drug price of therapy include the 535 prescription drug products most widely used by older Americans for chronic conditions. Source: Prepared by the AARP Public Policy Institute and the PRIME Institute, University of Minnesota, based on data from Truven Health MarketScan® Research Databases. $19,816) if retail price changes had been limited to the rate of general infation between 2006 and 2017. Prescription drug price increases afect consumers, employers, private insurers, and taxpayers who fund © AARP PUBLIC POLICY INSTITUTE programs like Medicare and Medicaid. Spending 601 E Street, NW Washington DC 20049 increases driven by high and growing drug prices will eventually afect all Americans in some way. Follow us on Twitter @AARPpolicy on facebook.com/AARPpolicy Those with private health insurance will pay www.aarp.org/ppi higher premiums and cost sharing for their health care coverage. Over time, it could also lead to Full report available at http://www.aarp. org/ rxpricewatch higher taxes and/or cuts to public programs to accommodate increased government spending. For more reports from the Public Policy Institute, visit http://www.aarp.org/ppi/. If these trends continue, older Americans will be unable to aford the prescription drugs that they https://doi.org/10.26419/ppi.00073.004 need, leading to poorer health outcomes and higher health care costs in the future. 2