Consumer groups report hike in Medicare Part D drug prices

Pharmaceutical manufacturers and Medicare drug plans say the studies misrepresent what seniors are actually paying for medications.

By David Glendinning, AMNews staff. July 10, 2006.

Washington -- In the first three months of the Medicare drug benefit, the average wholesale price for roughly 200 of the brand-name drugs most often used by older Americans underwent the single biggest jump in the last six years, according to a recent study by AARP.

The average price that drugmakers charged wholesalers for medications increased by 3.9% in the first quarter of the year, four times the rate of general inflation and the largest quarterly increase since AARP began tracking the figures in 2000. For typical people older than 50 taking four medications per day, this means their average annual drug bills increased roughly $240 over the 12 months leading up to the end of March, compared with an increase of roughly $190 during the previous year.

In a separate study, the consumer group Families USA found that Medicare drug plans are responding to the wholesale price increases by boosting what they charge for brand-name medications. For the top 20 drugs prescribed to seniors, the vast majority of Medicare Part D plans quoted higher prices in mid-April than they did in mid-November 2005, when enrollment for the drug benefit began.

The study showed that for 15 out of the 20 medications, more than 80% of the plans raised prices over that time period, rather than lowering them or keeping them the same. The median percent change was 3.7%.

Both groups said that seniors are being adversely affected because insurers are passing along the price increases to beneficiaries.