AARP's Public Policy Institute finds that retail price increases for a combined set of prescription drugs have exceeded the price increases for other consumer goods and services in recent years. This finding 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 514 brand name and generic versions of traditional and specialty prescription drugs widely used by Medicare beneficiaries was 4.8 percent, while the general inflation rate was -0.3 percent over the same time period. Previous reports by the AARP Public Policy Institute have focused on retail price changes for traditional outpatient prescription drugs (both brand name and generic drugs) and specialty prescription drugs (also including both brand name and generic drugs). Separate analyses of the price changes for these groups of drugs are reported because these sets of drugs are typically made by different drug manufacturers and their prices are subject to different market dynamics, pricing, and related behaviors. However, it is also useful to view the average price change for the combined market basket of outpatient prescription drugs widely used by Medicare beneficiaries in order to determine the trend across all types of prescription drugs. Specifically, this report compares prescription drug price changes to the rate of general inflation from one year to the next. The report focuses on changes in retail prices, or the amount that is actually charged to consumers (and/or insurers). Annual and five-year cumulative price changes through the end of 2009 are presented, 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 prescription drugs from 2005 through 2009. Additional findings summarize the cumulative impact of retail drug price changes that have taken place during the five-year period from 2005 through 2009.
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