Seniors' medicine discount eroding

Rocketing prices outstrip possible Medicare savings

New cards less effective

Brand-name drug costs far outpacing inflation

May 26, 2004|By Cyril T. Zaneski | Cyril T. Zaneski,SUN STAFF

Soaring prices for brand-name medicines are outpacing inflation by a wide margin and eroding possible savings for seniors using new Medicare-sponsored drug discount cards, according to separate studies released yesterday by two nonpartisan consumer advocacy groups.

Prices for 197 drugs most commonly prescribed for older Americans rose on average by 27.6 percent over the past four years - almost triple the overall rate of inflation in the period, an AARP Public Policy Institute report revealed.

Using a different measure, Families USA found that prices of the top 30 medicines used by seniors grew by more than four times the rate of inflation in the past year alone. And prices for the popular cholesterol-lowering medication Lipitor and the anti-blood-clotting agent Plavix rose more than five times the inflation rate.

"These are two studies that have a single message: The prices are going up - a lot," said economist David J. Gross, a co-author of the AARP report.

Ron Pollack, executive director of Families USA, said the hefty price increases translate into distress for seniors relying on the Medicare drug card program, which begins Tuesday.

"The overwhelming majority of seniors will receive no help this or next year from skyrocketing drug prices, and their medicines will be much more unaffordable," Pollack said. "For those who get discounts, potential savings will be negated by large increases in base prices."

Democrats used the studies to flog the Bush administration for crafting a Medicare overhaul that they say will do more for the health of pharmaceutical companies' bottom lines than for seniors. Congressional Republicans rebuffed Democrats' efforts last year to let the federal government negotiate lower drug prices for more than 40 million elderly and disabled Americans covered by Medicare.

"Seniors need a real break, along with the rest of America, but they won't get one as long as this administration panders to big drug companies that overcharge for their prescription drugs," Sen. Edward M. Kennedy, a Massachusetts Democrat, said in a statement.

But the Bush administration contends that the Medicare discount cards - a bridge to a full prescription benefit that begins in 2006 - will offer retail price breaks of 10 percent to 17 percent on brand-name drugs and curb price increases by publishing comparative prices on the Medicare Web site (

"We've delivered on a promise: It's real discounts, it's real help and it's right now," said Bill Pierce, spokesman for the Department of Health and Human Services. He called criticism of the card program based on the study results "ludicrous."

"The discounts will still help seniors," he said. "However much drugs have gone up over the last four years, whatever the price is today, that's what they'd be paying without the discount card."

Pharmaceutical companies said the studies ignore the fact that drug spending - though the fastest-growing part of the country's medical budget - represents only about 11 cents of every dollar Americans spend on health care.

"Publicly available government data demonstrate that increases in drug prices are in line with overall medical inflation," said Jeff Truitt, spokesman for the Pharmaceutical Research and Manufacturing Association. "From January 2001 through March 2004, the average pharmaceutical inflation rate was 4.4 percent a year compared to 4.6 percent a year for medical inflation. We are not the predominant driver of medical inflation."

Seniors who pay cash for their prescriptions also tend to be more aware of the price of medicine than of the cost of visits to doctors offices or hospitals, which are covered by Medicare, Truitt said. Cash customers also do not benefit from the 20 percent to 40 percent discounts that drug manufacturers give health plans and insurers.

"Seniors are paying cash on the barrel head, and that can be very problematic," Truitt said.

AARP figures that an older American - age 50 to 64 - who takes three prescription drugs would have spent $101 a year more on them in 2000, and $181 more in 2003, if price increases for medicines were passed directly to consumers.

AARP figured its drug price increases by studying changes in the manufacturers' prescription prices for the 197 most-prescribed medications in the AARP prescription program. Families USA studied the average wholesale prices of the 30 most-prescribed medications in the Pennsylvania senior prescription program.

"If we had used the average wholesale price, we would have arrived at the same numbers," the AARP's Gross said.

The AARP study is going to be repeated quarterly as part of the organization's efforts to pressure the pharmaceutical industry to restrain prices. AARP called on the industry this year to keep price increases in line with the rate of general inflation to help the more than 10 million elderly and disabled who have no prescription benefit.

"We know they can hold down price increases and still make very high profits," Gross said.

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