A recent report on trends in retail prices, called usual and customary (U&C) prices, from the US Government Accountability Office (GAO) found that prescription drug prices increased at a faster rate than costs for other medical goods and services.
The GAO studied four “baskets” of drugs that were commonly used by consumers. Using drug utilization data from the Blue Cross Blue Shield Federal Employee Program, which insures close to 5 million people, 100 drugs were selected. The first basket, containing both brand-name and prescription drugs, was based on drug name to study overall price trends. The second and third baskets were subsets of the first basket with the second containing 55 brand-name drugs and the third containing 45 generic drugs. The fourth basket was selected using active ingredient names only so that brand-name and generic versions were counted as being the same drug.
Results were tallied from 2006 to the first quarter of 2010 and were compared with a 3.8% average annual increase in the medical consumer price index. The first basket of drugs increased at an average annual rate of 6.6%, while the cost of the second basket rose by 8.3%. The third basket of drugs, containing only generics, decreased in price by 2.6%. The fourth and final basket’s price had an increase of 2.6%.
Report findings relating to the first and fourth baskets of drugs, which contain a mix of generic and brand-name medications, are noteworthy because that is how most consumers purchase their prescriptions. Once a pioneering brand-name drug becomes available as a generic version, many consumers opt for the less costly copy. A statement by The Pharmaceutical Research and Manufacturers of America noted, “Any analysis of prices must take into account the mix of brand and generic medicines that patients actually use,” and said that 80% of all prescriptions are filled with generic drugs.