AARP: Drug costs offset card savings


WASHINGTON - Despite government attempts to help senior citizens cope with the high cost of medicine, average prescription drug prices are rising by more than three times the rate of inflation, according to an AARP report released Wednesday.

A new law establishing a Medicare drug benefit, which AARP supported, has done nothing to discourage steep price increases, the group found after reviewing the top 197 brand-name drugs used by patients 50 and older.

The price increases have further fueled anger about the high cost of drugs, an important issue in the 2004 elections. The higher prices also have prompted advocates for senior citizens to demand new legislation that would allow importation of drugs from Canada and some other countries to give consumers a less expensive alternative.

Average prescription prices rose by 7.2 percent in the 12 months that ended in March, a period when the general inflation rate was 2 percent, according to AARP's "Rx Watchdog Report." Average drug prices rose 3.4 percent in the first quarter of this year, nearly three times the inflation rate of 1.2 percent.

"At the same time, the very same drugs are selling at 30 percent or even 50 percent less in Canada and overseas," said Doug Holbrook, an AARP board member. "Is it surprising that so many of our own citizens are looking outside our borders in order to afford their prescription drugs?"

In response, the Pharmaceutical Research and Manufacturers of America said that price increases are in line with inflation in the medical industry and that drug-makers are investing in development of new medicines.

"Government data, not PhRMA data, show that the prices of medicines have increased at an equal rate to other health care services since the Medicare bill was signed into law in late 2003," the pharmaceutical group said.

The drug-makers urged AARP to "put aside the politics of the moment" and turn its efforts to signing up senior citizens for the new Medicare drug discount card that became available last month.

The Medicare law, which was opposed by many Democrats in Congress, created a limited drug benefit, starting with the discount cards. AARP pushed hard for the law's enactment, although it does not allow importation of lower-priced drugs and includes a provision that prevents Medicare from using its bargaining power to negotiate lower drug prices.

Faced with a backlash from Democrats and many of its members, AARP is pressuring drug-makers to keep costs down while lobbying states to bargain for lower drug prices.

The giant advocacy group for older Americans has said all along that it would work to "improve" the new law, and it is throwing its considerable clout behind a bill in Congress to allow drug imports.

The close scrutiny of drug-makers includes quarterly reports on prices. The reports measure the selling price to wholesalers, which in turn affects retail prices.

"It's clear that some manufacturers were very aggressive and raised prices very substantially, and others did not," John Rother, AARP policy director, said Wednesday.

"The concern we have is that the manufacturers are offsetting discounts with prices that are higher than they otherwise would have been," Rother said. "It's particularly disappointing to see these prices jump after the legislation was signed, after they had the assurance that they would have a broader market to sell to.

"They are undercutting the understanding that was the basis for the legislation. Unless they are prepared to exercise more self-restraint, I think the Congress and American public are going to entertain additional steps to keep these prices affordable."



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