Prescription-drug price increases in 2004 more than double inflation rate

Shelley Wood

April 13, 2005

April 13, 2005

Washington, DC - Prescription-drug prices soared in the US in 2004, far outstripping the general inflation rate, according to a new report from the University of Minnesota and AARP, a US nonprofit organization for people age 50 and over. The average rate of increase in drug prices compared by month with the previous year appears to have been dropping, however, since June 2004, when Medicare prescription discount cards were first introduced.

Nevertheless, the average price increase for 195 brand-name prescription drugs in 2004 was 7.1%, compared with the inflation rate of 2.7%, according to the report: "Trends in manufacturer prices of brand-name prescription drugs used by older Americans—2004 year-end update." The price increases are the biggest one-year increase seen in any of the past five years, the report notes.

Alendronate sodium 70 mg (Fosamax, Merck), the best-selling drug of 2003, saw a price increase of 6.7% in 2004, while risedronate sodium 35 mg (Actonel, Proctor and Gamble), number 13 on the best-sellers list, rose in price by 7.6%. Celecoxib 200 mg (Celebrex, Pfizer), the sixth best seller, increased in price by 6.6% last year. Statins have seen comparable price hikes between 2003 and 2004.

For many drugs, prices have been rocketing skyward over the entire five years that the pricing has been tracked by the AARP: Celebrex, for example, has increased by 25% over a five-year period.

"A typical older American (who takes three prescription drugs) is likely to have experienced an average increase in the cost of therapy of $154.68 in 2004, assuming that the drugs are brand-name products and the full price increases were passed along to the consumer," the report states.

Percent change in manufacturer prices in 2004 for rheumatology-related drugs in the top 25 brand-name prescription drugs

Drug trade name and dose
% change in manufacturer price
Fosamax 70 mg
Lipitor 10 mg
Lipitor 20 mg
Prevacid 30 mg
Celebrex 200 mg
Protonix 40 mg
Nexium 40 mg
Actonel 35 mg
Proctor and Gamble
Pravachol 40 mg
Bristol-Myers Squibb
Pravachol 20 mg
Bristol-Myers Squibb
Evista 60 mg
Lipitor 40 mg
Toprol XL 50 mg
Zocor 20 mg

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Drug price increases outpace inflation

Of the 195 drugs in the sample, 153 have been on the market for the past five years. "Cumulatively, the average manufacturer price increase for these 153 brand-name drugs was more than two-and-one-half times the general inflation rate—35.1% compared with 13.5%," the report states.

"The cumulative effect of these price increases can be substantial. On average, manufacturer prices of the 153 widely used prescription drugs that have been on the market since the end of 1999 have increased by more than one third (35.1%) during the subsequent five-year period, compared with a general inflation rate of 13.5%," the report summarizes. "For a typical consumer who takes three brand-name prescription drugs, the average increase in the cost of therapy for drugs used to treat chronic conditions rose by more than $700 during this five-year period."


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