A new report from the AARP Public Policy Institute (PPI) examines trends in prices for 390 generic prescription drugs widely used by older adults. The report found that retail prices for these drugs fell by an average of 9.3% between 2016 and 2017; the general inflation rate rose by 2.1% during the same period. This follows two consecutive years of substantial generic drug price decreases; the previous two years saw prices increase.
These price changes have meaningful financial consequences for people with Medicare and others who rely on generic drugs to stay healthy. According to the report, the average annual cost for one generic medication used on a chronic basis was $365 in 2017. This represents a dramatic drop since 2013, when the average annual cost of therapy was more than two times higher ($751).
These findings are in stark contrast with trends in the brand-name drug market, where price increases continue to significantly outpace inflation. In 2017 alone, brand-name drugs widely used by older Americans increased by an average of 8.4%.
At the same time, the average annual price of brand-name drugs is considerably higher than that for generics, and the gap between the two is widening. Brand-name drug prices were six times higher than generic drug prices in 2013 ($4,308 vs. $751) but more than 18 times higher in 2017 ($6,798 vs. $365).
With older adults taking an average of 4.5 prescription drugs every month, these price disparities can have significant impacts on health and economic security. Medicare Rights supports efforts to address the issue of high and rising drug prices, including by easing access to generics and improving transparency within the drug pricing system. As brand-name drug prices continue to rise, the need for reforms that will ensure Medicare beneficiary access to affordable medications is ever more urgent.
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