According to a new study by AARP's Public Policy Institute, manufacturer prices for nearly 200 of the most commonly used brand-name medications rose at a rate of 3.9% during the first quarter of 2006, triple the rate of inflation. This is the highest first-quarter increase in manufacturer prices for brand-name prescription drugs in more than six years. For the 12 months ending in March 2006, prices rose, on average, by 6.2%--more than one-and-one-half times the 3.5% rate of general inflation for the same time period.
Medicare, which is prohibited by Congress from negotiating drug prices, is passing those increases on to seniors enrolled in Medicare Part D plans. Over the past five months, virtually all Part D plans raised their prices for the top drugs prescribed to seniors, according to a report issued by the health consumer organization Families USA. The report examined Medicare plan price changes from mid-November 2005 to mid-April 2006 and found that the median price for the top 20 drugs rose by 3.7%. For 19 of the top 20 drugs, changes in the median Part D plan prices were virtually identical to the changes in average wholesale price established by the drug manufacturers. In contrast, the report found that the Department of Veteran Affairs paid 46% less for the most popular brand-name drugs.
Medicare beneficiaries may drop Part D coverage as a result of rising drug prices, reports The New York Times. "Higher drug prices may lead to higher premiums next year, which may discourage enrollees from joining or staying in the program, and fewer enrollees could drive premiums even higher," Stephen W. Schondelmeyer, a University of Minnesota economist told the Times.
