Prescription-drug prices have been growing more quickly than the prices of other medical products and services, according to the Government Accountability Office.If your pharmacy bill seems to be growing larger faster, that's because it probably is. In the past four years, prescription-drug prices have increased much more quickly than the prices of other medical products and services, the nonpartisan Government Accountability Office said this week.

The GAO study, which Congress requested after the federal government spent $78 billion -- or about 31% of the $250 billion U.S. total -- on prescription drugs in 2009, found that prices for common prescription drugs grew at an average annual rate of 6.6% from 2006 through the first quarter of 2010. That's much higher than the medical consumer price index's 3.8% average annual increase.

And the prescription-drug-price hikes follow years of previous increases. In 2007, another GAO report found that the average price for commonly used brand-name prescription drugs had grown approximately 6% per year from January 2000 through January 2007.

Generic Prices Fall

But not all prescription drugs have been seeing price hikes. In its latest study, the GAO included 55 commonly used brand-name drugs and 45 common generic drugs. On average, the generic drugs' prices actually fell at an average annual rate of 2.6%, while the brand-name drugs' prices grew at an annual rate of 8.3%.

The growing gap between brand-name- and generic-drug prices means that many patients are switching to the generic versions, once they become available. The higher sales of generic drugs mean that, overall, the prices paid for each set of active ingredients increased only 2.6% per year, on average, not 6.6%.

Which drugs have seen the biggest hikes? Boehringer Ingelheim's enlarged-prostate-condition drug, Flomax, increased the most over the four-year period, adding 17.6% to its price. Sanofi-Aventis's (SNY) insomnia treatment, Ambien, came in second with a 15.2% boost. And Merck's (MRK) allergy pill, Clarinex, rounded out the top three, growing its price by 12.5%.

Is the Affordable Care Act Causing the Hikes?

In its study, the GAO also examined the allegation that drugmakers had jacked up prices ahead of the Patient Protection and Affordable Care Act, which passed in March 2010. The agency found that prices during that discussion -- from the first quarter of 2009 through the first quarter of 2010 -- grew approximately 5.9%, which is lower than the increases seen in either of the previous two years, but higher than the growth in 2006.

The 2010 health-care law doesn't actually include a provision to control general drug prices. Beginning this year, it does give seniors a 50% discount for brand-name drugs when they hit the Medicare "donut hole," which is a huge gap in drug coverage that leaves some seniors on the hook for thousands of dollars in prescription expenses. The gap is expected to close completely by 2020.

Increase your money and finance knowledge from home

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

Introduction to Retirement Funds

Target date funds help you maintain a long term portfolio.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

The Donut Hole is a crime The alledged 50% of Brand drugs is only for "Covered" drugs,not all brands. Example Paxel CR Not a covered drugs thru AARP United Health Care,so zero discount,cost $500.00 plus for a 3 months supply. Over $2000. per year.

March 26 2011 at 9:14 AM Report abuse rate up rate down Reply

all the politicians are lobbied by the banks,drugmakers,insurance companies.yes we have to remind them they are elected by the people and for the people not big business.thats why we need to let them serve only one term and reelect those politicians that are transparent,does not hold meeting behind closed doors,that serve only the public,that has the irs revue their bank accounts and personal wealth.and if they take any other money other than their salaries that that extra be paid to the treasury to pay down the debt.any drugs sold to patients be generic so the cost to people could be reduced.

March 19 2011 at 5:16 AM Report abuse +1 rate up rate down Reply

Think its bad do you? Wait untill you feel the full blunt of obamacare. If you think obamacare is going to make it all better, you have been severely brainwashed. Wake up. Nothing is free and healthcare is not a right. Its a commodity.

March 19 2011 at 2:53 AM Report abuse +3 rate up rate down Reply

Pharmaceutical companies have the ability to charge for that medication to make up the BILLIONS of dollars it took to research, develop, run study trials on, create a large-scale operation, and market it. Once a study drug starts its trials, the company only has 20 years to do all of this, AND begin to create profit before the generic companies swoop in and use the formulation.

Not only that, but not every drug that's studied makes it to the market. So not only do the prices need to make up for the profitable drug, it needs to make up for the loser drugs too.

Also, many of the new brand name drugs that are out are "me-too" drugs, which basically take one aspect of a well-known and very effective drug, and copy it. They slap a brand name on this thing, and the doctor's push it out on the patients to get, even though there may (not always) be a cheaper generic alternative you could try first. Be sure to ask your doctor for the generic medications first. It is your health and finances, take care of it yourself.

Drugs are not free. They are a business.

- Pharmaceutical Sciences Student

March 19 2011 at 1:10 AM Report abuse rate up rate down Reply

My mother had thyroid problems and for 35 of her 68 years of life she took Synthroid, with a 30 day supply costing $1.50. Now I have thyroid problems and when I began taking Synthroid serveral years ago, a 30 day supply cost me $3.62, now it is almost $25.00. This is an old drug, been on the market for years, and yet the drug companies can go as high on the price of it as they want to. My husband and I take many meds, and several of them have also gone up in price. This is price gouging, and the state or Federal Government should fine them like they do service stations for inflating the price of gasoline when it is scarce. Yes, greedy, greedy, drug companies!!!!!!!!!!!!!

March 19 2011 at 12:36 AM Report abuse +3 rate up rate down Reply
1 reply to cfdhjr's comment

There is a generic for synthroid known as levothyroxin. However, the probable reason why your doctor won't change your prescription for the cheaper generic is because they know that synthroid works for you. Synthroid and levothyroxin, while the same drug, are not metabolized in the body the same way, and so they have slightly different levels at different times. If the dose is improperly calculated between the generic and brand name, it could be toxic.

I wouldn't call it price gouging... The pharmaceutical company that developed this drug have fewer people on it than before the patent expired (due to the release of the generic). Therefore, there are less people to claim the money from to make back the cost to develop the drug, as well as getting a profit. It's simple supply and demand.

March 19 2011 at 1:15 AM Report abuse -1 rate up rate down Reply

Whats wrong with the post office.Would you rather pay fed ex 3.00 to deliver your letters?

March 19 2011 at 12:32 AM Report abuse rate up rate down Reply
Sally Jo

The problem with generics, though less costly, is the government says they can have anywhere from 85% to 110% ( or somewhere near there ) of the active ingredient. I had to be put on brand name drugs because of this. My blood levels went out to lunch on generics because one month I got too little and the next I got too much. Haven't had that problem on the brand. It does cost me more, but would be willing to go back to generic if they were forced to put 100% of the active ingredient in their product, without any fillers, such as soy. Some people - me included - are allergic to it. The drug companies don't have to fill their coffers with millions of dollars either. It costs them mere pennies to produce a pill they charge us 5.00 for.

March 19 2011 at 12:25 AM Report abuse rate up rate down Reply

In 2010, all was fine. We were paying our bills, and eating. My husbands prescription drugs were in our budget. Both my husband and oldest son, whom I take care of are disabled. Thanks to the new rules of cost cutting, the poverty income amounts to qualify for the prescription drug subsidy, has been lowered. This has caused my husbands co pays for his medications (16) of them. To go from a montlhy amount of 32.00 to a whopping 437.00. I then learned that because of the income reduction, he is being removed from medicaid as well. This means he'll be on straight social security with no help other than his humana gold, medicare supplement. Once medicaid ends, the medicine copays are expected to double. Hello! Our income has NOT changed in 5 years. January found us unable to pay all of our bills because of the drug co payments, February was even worse because new medications were ordered. Here it is March, they told me I have to repay 15,242 spouse benefit. I know I do not owe it. I went in to file a waiver. They had one set of figures in their computer, another set in the letter I got, another set in my 2009 W-2, and still yet a fourth set of figures from my w-2's on file. Nothing matched. Now I have to wait for them to do a redetermination, before I can file a waiver. Here, we are being dumped into a possible bankruptcy, just because I'm trying to keep my family alive. Work? yes I work. If I make enough money to cover his drug co pays, I get knocked off of the spouse benefit. Not so bad until they tell you at Social Security that if I no longer get the spouse benefit, then my son will no longer get SSI because his social security will go up. Then he'll have to purchase a medicare supplement, and be also knocked off of medicaid. So much reshuffling. Is it really beneficial to the country, to do this to people, and watch them go bankrupt when there is catastrophic needs? I don't know. I'm at a total loss for words.

March 18 2011 at 11:55 PM Report abuse -1 rate up rate down Reply

the biologics such as enbrel should have been released to generic production as is done in the rest of the world. In the USA, they get to keep their exclusivity and retain the cost of $15,000 to $25,000/yr for this one and only aid for rheumatoid arthritis, and is criminal...

March 18 2011 at 10:42 PM Report abuse +3 rate up rate down Reply

why doesn't someone say it like it is---PURE GREED---

March 18 2011 at 10:32 PM Report abuse +5 rate up rate down Reply