AARP's Public Policy Institute finds that retail price increases for specialty prescription drugs widely used by Medicare beneficiaries far outstripped the price increases for other consumer goods and services between 2005 and 2009; this is consistent with the pattern that we have seen since we first started tracking manufacturers' prescription drug prices in 2004. In 2009, the average annual increase in retail prices for 112 brand and generic specialty prescription drugs widely used by Medicare Part D beneficiaries was 8.9 percent, while the general inflation rate was -0.3 percent over the same time period. In contrast, retail prices for brand name non-specialty drugs widely used by Medicare beneficiaries experienced an 8.3 percent increase in 2009, and retail prices for generic non-specialty drugs widely used by Medicare beneficiaries experienced a 7.8 percent decrease. Especially notable is a persistent trend of steeper price increases among specialty prescription drugs in the years following the implementation of the Medicare Part D program, which provides prescription drug coverage for Medicare beneficiaries. This report presents our findings on the pattern of price changes for specialty drug products, a group that includes products sometimes referred to as biotech drugs or biopharmaceuticals. Specialty drugs have not been precisely and consistently defined elsewhere but generally include drugs that are used to treat complex, chronic conditions and require special administration, handling, and care management. Many of these drugs are used to treat conditions that often affect older populations, such as cancer, rheumatoid arthritis, and multiple sclerosis. Specialty drugs are also among the most expensive drugs on the market, with prices that can reach hundreds of thousands of dollars per year. They are expected to be the fastest growing group of drug products in the decade ahead. This report presents annual and five-year cumulative price changes through the end of 2009, using both rolling average and point-to-point estimates. The first set of findings shows annual rates of change in retail prices for widely used specialty drugs from 2005 through 2009, using both rolling average and point-to-point measures. The rolling average measure also is used to examine the distribution of price changes as well as differences in average percentage retail price changes for drug products from individual manufacturers and for specific therapeutic categories. Additional findings summarize the cumulative impact of retail drug price increases that have taken place during the five-year period from 2005 through 2009.
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