Drug Price Increases Continue to Outpace Inflation
For example, between 2015 and 2020, the annual price of Victoza, a diabetes medication, increased by 42 percent, with the price of a year’s supply rising from $7,936 to $11,300. During that same period the price of Lyrica, used to treat fibromyalgia, increased by 47 percent — from $5,827 a year to $8,562.
“AARP is calling on Congress to pass comprehensive drug reform,” says Nancy LeaMond, AARP executive vice president and chief advocacy and engagement officer. “Americans over the age of 50 use more prescription drugs than any other segment of the population. This is not a population that can afford rising drug prices.”
Increases are slowing
The data shows that while prescription drug prices continue to increase, those hikes have moderated in recent years. The 2020 increase was the slowest average annual hike since 2006. Purvis says the slower rate of increase could be attributable to the added scrutiny that organizations like AARP and state and federal lawmakers have put on the problem of skyrocketing drug prices.
AARP has renewed its campaign to convince federal and state governments to adopt policies that will help lower prescription drug prices. As part of its “Fair Drug Prices Now” initiative, AARP is calling on Americans to contact their representatives to urge them to act. Nearly a quarter of a million people have so far reached out to their lawmakers, urging them to pass drug reform legislation.
“We’re putting the full weight of our 38 million members behind the fight to lower drug prices,” says LeaMond. “The bottom line is that Americans are sick and tired of paying the highest prices in the world for prescription drugs.”
The report also depicts a long-term behavior by pharmaceutical companies, Purvis says. “The data shows that clearly the pharmaceutical companies have the power to take these smaller price increases all along, but haven’t. It shows exactly how much control they have over their prices and can choose when to use that control,” she says.
“When these price increases continue year after year it puts people in a position where they are making the tough choice of, do I pay for this prescription drug or do I eat this month? That is not a situation anyone should be in, but unfortunately that is exactly where we are,” Purvis adds.
Price hikes affect everyone
While the information in the AARP report refers to “retail” prices and a majority of Americans have either public or private insurance that helps pay their medication costs, these price hikes do work their way into higher health insurance premiums and higher taxpayer costs for the Medicare and Medicaid programs.
“Even if you pay only a relatively small share of that list price, these hikes are ultimately going to push up premiums to the point where health coverage becomes unaffordable,” Purvis says.
AARP suggests solutions
AARP continues to push for a number of policy changes it believes will lead to lower prescription drug prices. These include:
- Medicare price negotiations. Allow the program to negotiate the prices of prescription drugs and allow private insurance plans to have access to those lower prices.
- Inflation-based rebates. Require drug manufacturers to pay a penalty when their prices for prescription drugs covered by Medicare parts B and D increase faster than inflation.
- Out-of-pocket cap. Create a hard out-of-pocket spending limit for Medicare Part D prescription drug plan enrollees.