Drug costs surged in '04, AARP says.

Byline: From The Register-Guard and news service reports

Wholesale prices for brand-name prescription drugs jumped an average of 7.1 percent in 2004, the largest increase in five years and more than twice the overall rate of inflation, the AARP said Tuesday.

By contrast, the price for generic drugs hardly budged, rising 0.5 percent after increasing an average 13.3 percent the year before.

AARP's annual Rx Watchdog Report tracked prices that drug manufacturers charged wholesalers last year for about 200 prescription drugs and 75 generics popular with older Americans.

``Much more needs to be done to slow down spiraling drug pricing,'' AARP chief Bill Novelli said in a statement.

The news on generic drugs was welcome, but generics represent only about 10 percent of the market by dollar volume, the advocacy group said.

Several programs provide drug discounts for seniors, and in Oregon, AARP lobbyists are hoping to persuade the Legislature to expand the state's Prescription Drug Purchasing Program, a discount program that launched in March, said Jerry Cohen, director of AARP Oregon.

To qualify, a person must be 54 or older with an income of no more than 185 percent of the federal poverty level. That's $1,435 per month for a single person and $1,925 for a married couple.

AARP would like to open the program to all ages, expand eligibility to at least 300 percent of the poverty level and kill the six-month waiting period, Cohen said.

"That makes no sense," he said. "If you need meds, why should you wait six months?"

At the federal level, AARP wants Congress to give Medicare officials authority to negotiate drug prices with manufacturers, he said.

The Medicare drug discount programs provide scant relief for seniors trying to save money on their prescriptions, said Lorrie Graves, Eugene area coordinator for Senior Connections, part of Senior and Disabled Services.

"We tend to regard it as a small Bandaid in terms of meeting the needs of seniors," she said.

The Pharmaceutical Research and Manufacturers of America, the trade group representing drug manufacturers, said the AARP study was misleading on two counts.

First, it compares brand-name drug prices with general inflation, rather than medical inflation, the group said, using the analogy of comparing Pepsi to the overall economy rather than Pepsi to Coke.

When compared with medical inflation, prescription drug prices, including generics, rose about 4 percent vs. 4.7 percent for other medical services, said Lori Reilly, the trade association's deputy vice president for policy and research.

The trade group also said that the AARP study relies on what is referred to as the wholesale acquisition price, which does not take into account rebates and discounts provided by the manufacturer. ``It's just not indicative of what people pay at the counter,'' Reilly said.

Reilly said the 4 percent increase cited by drug manufacturers is based on the consumer price index, which she said is the most accurate measure for what consumers actually pay.

In its report, the AARP said the 7.1 percent increase in brand-name drug prices follows 2003's 7 percent jump. Since the end of 1999, the average wholesale price of more than 150 popular brand-name drugs rose an average 35.1 percent, nearly three times the 13.5 percent inflation rate over that period, the report said. In 2004, inflation was 2.7 percent.

Among the 25 best-selling drugs on the market in 2003 and 2004, the sleep medication Ambien (10 mg. tablets) saw the largest price jump at 11.9 percent. Flomax, used to treat enlarged prostates (0.4 mg. capsules) rose the least at 1.5 percent, according to the report.

Rising prescription drug costs could give more ammunition to lawmakers seeking legislation that would allow the importation of U.S.-made prescription drugs sold abroad.

``It's high time for the Bush administration either to pressure the drug industry to lower its prices or to stop opposing legislation to import cheaper drugs from Canada and other industrialized nations,'' said Sen. Ted Kennedy of Massachusetts, the senior Democrat of the Senate Health Committee.

Other lawmakers want the federal government to negotiate drug prices on behalf of Medicare beneficiaries when a new prescription drug benefit kicks in next year. The current plan is to have insurance companies that provide the benefit negotiate on behalf of their clients.

``As guardians of taxpayer funds, we should at a minimum ensure that Medicare has the right to negotiate better prices on drugs for seniors,'' said Rep. John Dingell of Michigan, the senior Democrat on the House Energy and Commerce Committee.

Jack Calfee, a resident scholar at the American Enterprise Institute, a conservative think tank, said he believes that the average price for prescription drugs has not increased as much as the AARP study indicates. He said that prices for some of the most popular prescription drugs have dropped significantly once they have become available as generics.

If AARP still included them in its brand-name survey, they would offset a large proportion of the increases for the remaining drugs, Calfee said.

The report was prepared by the AARP Public Policy Institute and the PRIME Institute of the University of Minnesota.

Reporter Tim Christie contributed to this report

DRUG DISCOUNTS

Information on drug discount programs:

The Prescription Drug Purchasing Program is a state program that can save participants 30 to 60 percent on medication. Call AARP, [phone], or Oregonians for Health Security, [phone]. On the Web go to egov.oregon.gov/DAS/OHPPR and click on "Drug Program (OPDP)"

AARP has a Web site that compares the effectiveness and prices of nine classes of prescription drugs at www.aarp.org/states/or

The Partnership for Prescription Assistance is a coalition of drug companies, doctors, patient advocate and community groups that has information on public and private sector patient assistance programs that provide free or discounted drugs to eligible patients. Call (888) 4PPA-NOW or on the Web, go towww.pparx.org

For information on Medicare discount drug cards, go towww.medicare.gov