News and Commentary

Battling Inflation With Generics

The best and easiest way for health plans to save money on prescription drugs is for their enrollees to use generic versions. Prices for common brand name conventional drugs and for specialty prescription drugs continue to outstrip inflation, while prices for common generic drugs have declined.

According to the Rx Watchdog Report from the AARP Public Policy Institute, the average annual rate of increase for widely used brand name, generic, and specialty prescription drugs was 4.5 percent, or 20 percent above the general inflation rate of 3.8 percent.

The report found that the cost of therapy for consumers who take three or more brand name prescription drugs rose by almost $2,100 between 2002 and 2008.

Other findings include:

  • All but 7 of the 219 brand name prescription drug products in the study had manufacturer price increases during 2008. Nearly all (93 percent) of these increases exceeded the rate of general inflation during the year.
  • Generic drug prices for the 185 drugs most widely used by Medicare beneficiaries fell by 10.6 percent in 2008, the largest decrease since 2003.

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