Drug lobby defends rise in prices

The AARP findings, according to the Pharmaceutical Research and Manufacturers of America (PhRMA), the branded drug lobbying powerhouse, is at odds with other figures indicating that the rise in drug costs is consistent with overall medical inflation.

“Independent and government data continue to show prescription medicines represent a small and decreasing share of growth in overall health care costs in the United States,” Rick Smith, PhRMA’s senior vice president, said Wednesday in a statement.

“The recent decline in drug spending growth has contributed to one of the lowest rates of total healthcare growth in the past 50 years.”

The comments are a response to a new report from AARP, the 50+ lobbyist group, which found that the retail price of the 217 brand-name drugs most commonly prescribed to Medicare beneficiaries jumped 8.3 percent in 2009 — the steepest increase in the last six years.

“Unless something is done to bring down their skyrocketing price increases, life-saving medicines will be out of reach for too many,” John Rother, AARP’s executive vice president, said in a statement announcing the report. 

PhRMA’s initial response doesn’t address AARP’s findings directly, but instead focuses on other indicators related to drug-cost trends.

The Consumer Price Index (CPI), for instance, “reveals that since 2000, prices for prescription medicines have risen in line with medical inflation,” Smith said. He conceded, though, that CPI data is not based on brand-name drugs alone, but on “a blend of brand and generic drugs that reflects what consumers actually buy.”

Smith also noted new figures — crunched by Medicare’s trustees — projecting that the Part D prescription drug benefit will cost hundreds of billions of dollars less than initially thought. That trend, he said, is largely attributable to the rebates drug companies offer.

Last week, Medicare officials said Part D’s new cost projection — now estimated to be $373 billion over 10 years, down $261 billion from the original figure — acknowledges “an abrupt deceleration in drug trends” in recent years, including cost and utilization trends.

Officials cited three reasons for the new Part D cost estimate: (1) The rising popularity of generic drugs; (2) Part D plans were able to negotiate steeper rebates than Medicare initially thought; and (3) enrollment has been lower than projected.