Yahoo! News Wed, Jun 30, 2004
Drug Prices Spike After New Medicare Law-Group
By Susan Heavey
WASHINGTON (Reuters) - Drug firms raised the prices of some medicines as
much as 10 percent since the Bush administration enacted the new Medicare
law late last year, making it hard for some patients to afford them, a new
report said on Wednesday.
AARP, formerly known as the American Association of Retired Persons, said
the prices of brand-name drugs most used by older adults climbed an average
3.4 percent since late December.
The jump -- three times the rate of inflation -- was one of the sharpest
quarterly spikes since 2000, the nation's largest group representing the
elderly said in its report.
Drug manufacturers used "very aggressive pricing practices ... that harm
the elderly population's ability to afford those drugs," said John Rother,
AARP's policy director.
The findings follow an earlier AARP report showing prices for the same
drugs grew 6.9 percent in 2003. But the quarterly increase since President
Bush (news - web sites) signed the Medicare bill into law was particularly
high, according to the study.
AARP, which supported the bill, is concerned "manufacturers are offsetting
the discounts with prices that are higher than they otherwise would have
been." Rother said. "It doesn't seem to be market driven."
Drug companies say higher prices reflect growing research and development
costs. They also argue spending money on medicine can prevent more
expensive hospitalization and other treatments.
Richard Smith, head of policy for the Pharmaceutical Research and
Manufacturers of America, said government data show prices "have increased
at an equal rate to other health-care services."
AARP researchers studied wholesale prices of 197 brand-name prescription
drugs most used by older adults.
Boehringer Ingelheim, Allergan, Bristol-Myers Squibb Co., Purdue
Pharmaceuticals and Aventis topped the list with increases five times
higher than inflation.
Among the most used products, Johnson & Johnson's pain patch Duragesic saw
the biggest jump at 9.9 percent, followed by Novartis' cholesterol drug
Lescol at 9.5 percent.
For top-selling drugs, Bristol-Myers Squibb's anti-clotting drug Plavix
rose 7.9 percent, followed by its cholesterol-fighting Pravachol at 7
While about half of the drugs saw no change, big price spikes for the rest
tipped the overall trend, AARP's Rother said, adding consumers were likely
to absorb most of the increases.
"We encourage companies to exercise more self restraint," he said.
Similar price hikes also were seen after the Republican-led Congress
initially passed the Medicare bill earlier in 2003, according to the
At a campaign event earlier this month, Bush said prescription drug cards
mandated by the new Medicare law would save the elderly at least 15 to 30
The law aimed to help older Americans without drug coverage pay for their
It includes a privatized drug card program as a temporary fix until a full
Medicare prescription benefit starts in 2006. It also prevents the U.S.
government from negotiating medicine prices.
While initially thought to be a boon to Republican reelection efforts, some
critics say the program is too confusing and gives drug firms too much
Bush's expected Democratic rival, Sen. John Kerry (news - web sites) of
Massachusetts, has blasted the cards in favor of allowing Americans to buy
cheaper drugs from abroad, turning prescription and other health care costs
into a major election issue.
AARP has also said it favors importing drugs from Canada and other
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