PRICES FOR BRAND DRUGS INCREASING FASTER THAN THOSE FOR GENERICS, SAYS GAO

Retail prices for frequently used brand drugs have increased roughly three times faster than those of commonly used generic drugs, according to a Government Accountability Office (GAO) report, which predicts public and private insurers will turn to generics to reduce costs.

"With brand drug prices increasing three times as fast as generic drug prices, public and private health insurance sponsors will likely continue to focus on strategies to encourage increased use of generic drugs when available," says the report, requested by Sens. Olympia Snowe (R-Maine) and Ron Wyden (D-Ore.).

From January 2000-December 2004, the average retail price paid by patients without prescription drug coverage for 96 frequently used drugs increased 24.5 percent. Twenty drugs -- 19 brand and one generic -- accounted for 64 percent of the total retail price increase, the report shows.

The report collected data from pharmaceutical assistance programs for the elderly in New York and Pennsylvania on usual and customary (U&C) prices -- prices customers without insurance paid to pharmacies. The GAO also looked at how the changes in U&C prices compared to changes in two other drug price indexes: the average manufacturers price (AMP) that drug manufacturers charged wholesalers, and the average wholesalers price (AWP) that drug wholesalers charged pharmacies.

While the U&C price for 50 frequently used brand drugs increased 28.9 percent, the price of 46 frequently used generic drugs rose only 9.4 percent. The AMP for the 50 brand drugs went up 28.2 percent. But the AWP for the brand drugs -- the index that affects how much the government reimburses pharmacies for Medicaid drugs -- increased even more sharply, rising 31.6 percent.