Prescription drug prices have risen more quickly over the past four years than costs for other medical goods and services, the Government Accountability Office reported on Monday.
The average price of a basket of 100 commonly used generic and brand-name drugs rose 6.6 percent each year between 2006 and 2010, the GAO found. For brand-name drugs alone, the prices rose 8.3 percent annually.
Democratic members of Congress who ordered the report said its findings show why the health care reform law must not be rolled back, as promised by many Republicans.
“These soaring price increases seem to defy explanation,” House Energy and Commerce Committee ranking member Henry Waxman, D-Calif., said in a statement.
“Congress needs to investigate and stop drug companies from overcharging seniors. This new report also shows the importance of the benefits we provided to seniors when we closed the Part D drug donut hole in the health care reform law. Now thanks to the health care reform law, the average senior who hits the drug donut hole will get some protection from drug price hikes and save over $500 in 2011,” Waxman said.
Americans spent $250 billion on prescription drugs in 2009—of which $78 billion or about 31 percent of it was paid for by the federal government, the GAO report said.
“To select our baskets, we used prescription drug utilization data from the Blue Cross Blue Shield Federal Employee Program, a large, nationwide insurance plan that covers nearly 5 million individuals,” the GAO report reads.
“We found that the usual and customary price index for our first basket of 100 commonly used prescription drugs increased at an average annual rate of 6.6 percent from 2006 through the first quarter of 2010 compared with a 3.8 percent average annual increase in the medical consumer price index.”
“This report only further illustrates the importance of closing the prescription-drug donut hole and providing relief to seniors through health care reform,” said House Ways and Means ranking member Sander Levin, D-Mich. “At every step, I will vehemently oppose reckless Republican efforts to take away those benefits from seniors. The committees will diligently monitor drug-price trends to make sure that seniors benefit from the full discount.”
The 2010 health care law gives seniors a 50 percent discount for brand-name drugs when they hit the so-called Part D drug coverage gap, or “donut hole,” and is scheduled to close the gap completely by 2020. For 2009, the donut hole started when a Medicare patient’s drug bill hits $2,700 and continued until $6,154. After that, 95 percent of drug costs were again covered by Medicare.
The Pharmaceutical Research and Manufacturers of America said the report in fact showed reasonable growth in prices.
"Too often, medicines are viewed as a cost and not as a savings, even though medicines often reduce unnecessary hospitalizations, help avoid costly medical procedures and increase productivity through better prevention and management of chronic diseases," PhRMA President and CEO John Castellani said in a statement.
"Moreover, according to data from IMS Health, spending for prescription medicines has been growing at ‘historically low’ rates. IMS data shows spending grew an average of percent annually from 2004 to 2009, and is expected to grow at a rate of 3.5 percent from 2009 through 2013."
Dr. Sidney Wolfe of Public Citizen questioned whether the health care law would cut drug costs at all. "Certainly there is nothing in the legislation to control prices," Wolfe said in a telephone interview.
Wolfe accuses President Obama of having agreed to leave drug price controls out of the legislation in return for support from the companies for the bill. "That was the tradeoff, so to speak, in the back room, private deal," Wolfe said.
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