Generic Drug Prices Stabilize While Name Brand Costs Escalate

WASHINGTON -- The cost of generic drugs most often used by older Americans in the United States appears to be stabilizing while prices of brand-name drugs, especially those heavily advertised, are shooting up, according to a University of Minnesota study released Tuesday.

The study found that brand-name drugs have increased in price, over the past year, at about nine times the rate of generic drugs.

"The study shows that generics are a better deal and people should look for them," said John Rother, policy director at the AARP, the study's sponsor.

Rother said the study also showed that generic drug prices may be held down by competition while brand-name drugs often have the market to themselves. He said some of the sharpest rises in brand-name prices were for drugs heavily advertised on television.

"Brand names have a monopoly," Rother said.

The drug industry's voice in Washington responded that drug price increases have been lower than the inflation rate in overall medical care. "Beginning in January, America's seniors will get large savings on medicines by enrolling in Medicare's new prescription drug insurance program," said Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America.

The drug cost study, conducted by the University of Minnesota's Prime Institute, pointed out that the manufacturer list prices of 75 generic drugs, most widely used by Americans age 50 and older, rose seven-tenths of one percent in the year that ended March 31.

By contrast, manufacturer prices for brand-name drugs rose 6.6 percent in the same 12 months, AARP said.

There was a slight slowdown in price increases for brand-name drugs, AARP said, noting that brand-name prices went up 7.1 percent during the previous 12-month period. It said that price increases shown in the first three months of this year also suggest a slowing of drug costs.

The group said that brand-name increases appear to have "declined consistently" since the June 2004 introduction of Medicare prescription drug discount cards.

Federal officials have expressed hope that the launching of the Medicare prescription drug benefit in January will dampen drug price increases.

The Minnesota study said that a typical older American who takes three prescription drugs per day is likely to have paid an additional $144.15 on drugs for the past year if the drugs were brand-name products. Editor Notes: (From McClatchy News Service, for use by New York Times News Service clients.)