The AARP’s annual report regarding the retail cost of brand-name drugs has been released. And despite the fact that about 75 percent of U.S. prescriptions are now generic, the numbers in the report speak to the unexplainable rate at which U.S. pharmaceutical companies are raising the costs of their medications.
Although U.S. consumer prices, on average, dipped about half a percentage point in 2009, the cost of the most popular brand-name drugs in the U.S. jumped more than 8 percent according to the AARP. That’s after a 7-percent increase in 2008.
Although overall inflation has been measured at 13.3 percent since 2004, the cost of brand-name drugs has catapulted by 41.5 percent since then – more than 3 times the rate of inflation.
“Something is out of whack here,” an AARP spokesman said.
After looking at the price increases of one particular medication, prostate drug Flomax, it is easy to understand the AARP’s stance. The patent of Flomax expired this year, and in the last five years, the retail price soared 92 percent from $827 a year to almost $1,500 a year.
Most Americans have switched over to generic medications, the cost of which have remained rather steady, a fact the pharmaceutical industry group Pharma is quick to point out. Pharma states that AARP did not include generics in its study, and that the government’s survey for its Consumer Price Index arrived at a number of 3.4 percent for the 2009 increase in drug costs.
AARP states many older Americans, many on Medicare or Medicaid, find it important to remain on brand-name drugs for their chronic conditions, and that they are forced to take generics unless they want to reach the “doughnut hole” for Medicare. Anyone on Medicare must foot their entire bill for medications once they surpass $2,830 in spending on them, until they reach $4,550 in spending on them.
Although the doughnut hole will be phased out over the next 10 years, many in the pharma industry refer to the concessions that had to be given to the pharma industry in order to move forward with the plan – namely, the government’s assurance that it would not put its nose into regulating drug prices.
The question remains as to how expensive drugs will become? There appears to be no limit. Although generics may be the smart choice for many Americans, drugs that come to market are on patent for more than a decade. Seniors and other consumers have no choice but to lighten their pocketbook until the patent runs out.
Take Viagra, for example. Pfizer has raised the price of Viagra 16 times since its introduction – including nine times since Jan. 1, 2007. Wholesale cost for a bottle of 100 pills started out at $700 in 1998, and is now at $1,700 – an increase of 143%. The price of viagra online also follows suit.
In its first eight-plus years on the market (through 2006), Viagra’s wholesale price was increased 36.4 percent by Pfizer. In the less than four years since, Pfizer has raised the price of Viagra 78.1 percent. The Viagra patent runs out in 2012.
It seems the closer a drug gets to patent expiry, the pharmaceutical companies milk it for all it is worth. It’s not like they have explained away the increases by saying production costs have increased.