Drug industry officials challenged the finding, however, saying select brand-name prices did not reflect the reality of more people using low-price generic drugs. Generics now account for about 75 percent of all dispensed prescriptions in the United States, according to IMS Health, a research firm.
The industry pointed to a broader survey of drug prices showing they rose by 3.4 percent during 2009. The survey, conducted by the government for its official Consumer Price Index, includes generic as well as brand-name drug prices, Jonathan Church, an economist at the Bureau of Labor Statistics, said on Tuesday.
John A. Vernon, an assistant professor of health policy at the University of North Carolina, Chapel Hill, praised the AARP for changing its methods to count retail prices instead of wholesale prices. But Professor Vernon, who had consulted for drug companies and challenged the AARP wholesale price report at a Congressional hearing last year, said its new report was still flawed.
“It can easily be shown that branded prices are higher here than they are in other countries, but we have the lowest and the most competitively priced generic drugs in the world, and the generic share is going up rapidly,” he said. “Just focusing on brands I think is unfair.”
John C. Rother, executive vice president for policy and strategy for the AARP, agreed that generic drug prices had held stable or declined. But he said the group’s new retail price analysis showed why many older Americans were struggling to pay the cost of brand-name drugs they needed for chronic medical conditions.
AARP has changed the method of its annual drug report to look at retail prices, responding to industry complaints last year that measures of wholesale prices, showing brand-name increases far in excess of inflation, were misleading because they did not consider manufacturer discounts. The new report, however, finds the same result on price.
“Brand-name retail prices have been accelerating year-to-year even when inflation has been nonexistent in the rest of the economy,” Mr. Rother said in an interview by phone Tuesday.
The incontinence drug Flomax led the way with a 24.8 percent rise in retail price last year, to $4.09 a pill. Flomax sells for $4.42 a pill on drugstore.com, while its generic equivalent, tamsulosin, sells for $3.63 a pill.
Ann Wainwright, a spokeswoman for Boehringer Ingelheim, did not answer questions about Flomax prices in an e-mail, but said the company was committed to access to medicines, including free medication for eligible low-income patients.
The Flomax patent expired this year, opening the gates for generic competition.
During 2009, among the most popular brand-name drugs, retail prices rose 6 percent, to $5.40 a day, on Nexium from AstraZeneca ; 8.8 percent, to $5.06 a day, on Plavix from Bristol-MyersSquibb ; 7 percent, to $5.50 a day, on Prevacid from Takeda; 6.8 percent, to $4.21 a day, on Protonix from Wyeth; and 4.1 percent, to $4.03, on Lipitor 20-milligram tablets from Pfizer , the report says.
The AARP reported overall increases of 8.3 percent in 2009, 7.9 percent in 2008, 7 percent in 2007, 6.1 percent in 2006, when Medicare drug benefits started, and 6 percent in 2005. The Bureau of Labor Statistics, including generic prices, reported drug price increases for the same years of 3.4, 2.5, 1.4, 4.3 and 3.5 percent. Both used weighted averages to account for product usage.
The AARP report says many older Americans rely on brand-name drugs for chronic illnesses. It says higher prices push them more quickly into a coverage gap known as the “doughnut hole,” where they have to pay the full cost of drugs.
That gap is being phased out over the next 10 years under the new health care law, including drug industry discounts on brand-name drug prices in the coverage gap.
The Pharmaceutical Research and Manufacturers of America, the industry trade group in Washington, released a statement on Tuesday saying “prescription medicines represent a small and decreasing share of growth in overall health care costs in the United States.”
“Not only is the recent rate of growth for prescription medicines historically low, but the recent decline in drug spending growth has contributed to one of the lowest rates of total health care growth in the past 50 years,” the group said.
The statement cited reports that Medicare drug spending had been far less than initially projected, partly due to generics.