Retail Drug Prices Rises Faster than Inflation During the Pandemic

With COVID-19 pandemic greatly affecting the economy, prices for certain goods went up that even top brand name drugs had price increases that exceeded the general inflation rate.

According to AARP’s Rx Price Watch Report covering the retail prescription drugs industry in 2020, retail prices for 260 brand name prescription drugs increased more than twice as fast as general inflation, “rising 2.9% compared to an inflation rate of 1.3%.”

“It’s inexcusable that even during a pandemic and financial crisis, brand name drug companies continued to increase their prices so much faster than the prices of other goods and services,” said Debra Whitman, Executive Vice President and Chief Public Policy Officer at AARP.

In 2015, the average annual cost of one brand name medication that is used regularly is $5,500. But last year, the average annual cost went over to $6,600.

If an older American is taking four to five prescription drugs per month, the annual cost of their medication in 2020 would have been more than $31,000 which is way over the average annual income of $26,000 for Medicare beneficiaries.

Moreover, according to AARP: “Medicare Part D spending nearly $40 billion more on top brand name drugs between 2015 and 2019 due to price increases that increases the general inflation rate.”

Moreover, Medicare Part D spent nearly $40 billion more on top brand name prescription drugs because companies had “annual price increases that exceeded the corresponding rate of inflation from 2015 to 2019.”

“It’s unfair that drug prices keep rising, even for medications that have been on the market for decades. Americans can’t afford to keep paying the highest drug prices in the world,” said Leigh Purvis, Director Health Care Costs and Access, AARP Public Policy Institute, and co-author of the reports.

In response to the growing need to regulate prescription drugs, AARP has been calling on national and state lawmakers to take action to address the issue including:

Price Negotiation: Allow Medicare to negotiate the prices of prescription drugs for its beneficiaries and allow other insurers to have access to the Medicare-negotiated prices.

Inflation Based Rebates: Require drug manufacturers to pay a penalty when their prices for prescription drugs covered by Medicare Parts B and D increase faster than inflation.

Out-of-Pocket Cap: Create a hard out-of-pocket spending cap for Medicare Part D enrollees.

“No one should be forced to choose between paying their bills and paying for the medicine they need to stay healthy. Our leaders need to take action now to lower drug prices,” Whitman said.

AARP is the country’s leading and largest nonprofit and nonpartisan organization dedicated to empowering people age 50 and older. To view the full Rx Watch Report, visit aarp.org/rxpricewatch.