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Drug Prices Rising Faster Than Inflation

A recent report has revealed that the prices of brand-name prescription drugs that are commonly used by older Americans are rising// faster than the rate of inflation.

However AARP's quarterly Rx Watchdog Report shows that prices of the 75 generic drugs commonly used by older Americans remain unchanged.

AARP survey of around 200 brand-name prescription drugs found that there was an increase in prices by 6.3 percent during the 12 months up to the second quarter of June 2006. The group found that this increase was more than the rate of inflation that was 3.8 percent over the same period.

Some of the drugs which showed the maximum year-to-date increases were Adventis' Ambien, a sleeping pill, 5 milligram, with an inconceivable rise of 13.3 percent price hike; Pfizer's Atrovent Inhaler showing a price hike of 12 percent, Boehringer Ingelheim's Combivent, a bronchodilator aerosol, also with a rise of 12 percent; Adventis' Ambien 10 mg. with a 9.9 percent price hike; and GlaxoSmithKline's Wellbutrin, an antidepressant, 150 mg, having a 9.4 percent price hike.

The lowest price increases were for the drug companies Monarch and Takeda (0.0 percent) and Lilly (2.5 percent). According to report author Susan Raetzman, associate director of the AARP Public Policy Institute the rate of price increases is the same as it has been in recent years, said report. She said, "When you look at how that translates to the cost of the drug to people, it's an increase of over $70 a year for a drug that's taken on a regular basis. And that's quite a bit higher than it has been in the past."

The average increase in drug costs for older Americans works out to around $300 a year, according to the report. Raetzman said that drug companies keep raising prices because they can. She said, "There really aren't market forces at work. They don't have competitors."

In addition Raetzman noted that prices are likely to go up for those in Medicare Part D plans as cost increases get passed along to members. She said that even though these plans purchase drugs at below-retail cost, there was no legal requirement that they pass the savings on to their members.

To ease the rising drug costs, AARP is supporting a bill in Congress to allow Americans to import drugs from Canada and other western nations.

David Sloane, AARP's senior managing director of government relations said, "We've never been this close to getting meaningful relief from rising prescription drug costs. For the first time, a bill that would allow safe and legal importation of medications has widespread bipartisan support."

Sharon Treat is executive director of the National Legislative Association on Prescription Drug Prices said the price increases aren't justifiable, economically or socially.

She said, "I think it's outrageous. The drugs that they sell the most of are the ones that have the biggest increases, which imply it has nothing to do with normal economic theory. People are being ripped off, our government is being ripped off, and people's health is being affected as a result."

According to Treat the Medicare Part D prescription drug plan for seniors that took effect Jan. 1 has done nothing by way of reducing prices. ‘In fact,’ she said ‘prices have now zoomed up more than they had before Part D was passed.’

She also noted that under Part D, the federal government cannot negotiate drug costs. Treat said, "The government has ceded over to the private sector all the negotiation and has divided up the pool of enrollees, which reduces purchasing power. The end result is that there is no strong push to reduce prices."

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