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Families USA, AARP Studies Find Drug Prices Rising

June 20, 2006 -- Over the last five months virtually all Medicare drug plans have raised prices for the top drugs prescribed to seniors to treat conditions such as high cholesterol, osteoporosis, and high blood pressure, according to a new study from Families USA.

A separate study released Tuesday from the seniors group AARP found that prices for drugs commonly used among Americans age 50 and older had soared to their highest levels in the first quarter of the year, the biggest increase since the group began tracking prescription drug prices six years ago.

A Centers for Medicare and Medicaid Services (CMS) analysis released Tuesday said the Medicare drug program "is providing significant discounts on prescription drugs, with available savings remaining extremely stable over time." The analysis also concluded that prices for drugs used by beneficiaries with chronic conditions rose 3.6 percent from December 2005 through June 2006, while average wholesale prices for the drugs increased 4.1 percent.

The Pharmaceutical Research and Manufacturers of America (PhRMA) said both reports were aimed at scaring seniors. PhRMA Senior Vice President Ken Johnson called the AARP report "a flawed and deceptive study" and said drug prices have been in line with medical inflation. He said the Families USA findings were "discredited information" designed to discourage seniors from enrolling in the new drug benefit.

Mohit Ghose, a spokesman for America's Health Insurance Plans, a trade group representing insurers, said "we know from first-hand experience across the board that private sector competition and tools are working for Medicare beneficiaries." Competition in Medicare Part D will save the program $30 billion and the average plan premium is about $24 rather than the $37 originally forecast by the Congressional Budget Office, Ghose said.

Rising Prices
The Families USA report, which the group said was based on pricing data that Medicare drug plans submitted to CMS, examined Medicare plan price changes from mid-November 2005, when the drug benefit began, to mid-April 2006. The report evaluated the Part D plan prices for the top 20 drugs prescribed for seniors. Among its findings, the study concluded that all Part D plans raised their prices for the cholesterol-lowering drug Zocor while almost 99 percent raised prices for Fosamax, a drug used to treat osteoporosis. More than 97 percent of plans raised their prices for Lipitor, another cholesterol-lowering drug, while more than 92 percent of plans raised their prices for Aricept and 89 percent raised prices for Plavix, drugs used for Alzheimer's and stroke, respectively. Overall, Part D drug prices increased by 3.7 percent.

"At the same time that the Bush administration and Congressional leaders are touting the effectiveness of the Medicare drug plans, those plans are quietly raising the prices that they charge," Families USA Executive Director Ron Pollack said in a statement. "As a result, seniors will pay more and more—as will America's taxpayers."

In its statement, CMS noted that Medicare drug plan beneficiaries who enroll in the lowest-cost plan available in their area could save an average of 60 percent on the cost of their drugs, with potential savings as much as 72 percent.

Johnson of PhRMA said "there is no doubt that seniors enrolled in the new Medicare program are in a better position since the prescription drug coverage began just a few months ago."

The AARP analysis, conducted by AARP's Public Policy Institute, found manufacturer prices for nearly 200 of the most commonly used brand name medications rose at a rate of 3.9 percent during the first quarter of 2006, triple the rate of general inflation. Prices rose on average by 6.2 percent for the 12 months ending with the first quarter of 2006, more than one-and-one-half times the 3.5 percent rate of general inflation for the same time period, the study found.

Increases noted in the AARP report include a 13.3 percent increase for the sleep drug Ambien—the drug also rose 20 percent in 2005—and 12 percent increases for inhalers Combivent and Atrovent.

"State, federal, and family health care budgets are being stretched to the max and, sadly, sometimes beyond. It is simply unsustainable for American consumers to continue footing the bill for large increases in drug prices," AARP Chief Executive Officer Bill Novelli said in a statement.

PhRMA's Johnson said the AARP report lacked credibility because U.S. government consumer price data "show that inflation of prescription drug prices has clearly been in line with overall medical care cost inflation for the past several years."

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