Do you feel as though your pharmacy bill seems to be getting larger by the day? If so, it probably is. The last four years have seen a major hike in prescription drug prices compared to other medical services and products. The Government Accountability Office, a non partisan group, submitted a study to Congress which requested they take a careful look at the data. In 2009 nearly $78 billion was spent on prescription drugs by the federal government. That is about 31 percent of the US total of $250 billion.
The study found that prescription drug prices grew at the rate of 6.6% annually from the year 2006 until 2010. However, the medical consumer price index is much less than the growth rate of prescription drug prices, which only saw an annual increase of 3.8%.
The GAO report shows a similar pattern of drug price hikes from previous years. In 2007 a growth was seen in commonly used prescription drug brands and from January 2000 to 2007 prescription drug prices had grown approximately 6% per year.
Thankfully not all prescription drugs fell into the price hike category. The latest study conducted by the GAO on 45 generic drugs and 55 frequently used brand drugs showed that the prices of generic drugs fell at the rate of 2.6% annually, although the rate of brand drugs grew at the rate of 8.3%. There seems to be a gap existing between the generic drug prices and brand drugs, which goes to show that patients are opting to purchase generic versions. The increase in sales of generic drugs means that the active ingredient prices paid only increased by 2.6% annually, instead of the previous increase of 6.6%.
So which drugs have experienced a big price hike? Boehringer Ingelheim drug, Flomax (enlarged prostate), saw the biggest price hike in the last four years at a rate of 17.6%. Sanofi-Aventis’s Ambien used for insomnia came in second place with a price hike of 15.2%. Merck’s Clarinex, the allergy pill, came third on the list with a price hike of 12.5%.
The Affordable Care Act and Prescription Drug Price Hikes
Is there a connection between the Affordable Care Act and prescription drug price hikes? Well, it seems to be the case when reviewing data in the study conducted by the GAO. The study reveals allegations that drug prices were jacked up in March 2010 before the Patient Protection and Affordable Care Act was passed. The GAO study found that drug prices grew at the rate of 5.9% during the discussion of the Act, between 2009 and 2010. This rate, however, is lower than the price hikes seen in previous years, though still higher than 2006.
There is no control act on general drug prices in the health care law passed in 2010. Beginning 2011, seniors are given a 50% discount on brand drugs when they reach the ‘donut hole’ in Medicare. This donut hole can become a major gap sometimes costing seniors as much as thousands of dollars in drug prescription expenses. It is hoped that this gap will close by the year 2020.