A ARP PUBLIC POLICY INSTITUTE

                                                                                              APRIL 2019


Rx Price Watch

Price Decreases for Widely
Used Generic Drugs Slow
in 2017 after Two Years of
Substantial Price Drops
Stephen W. Schondelmeyer                                Leigh Purvis
PRIME Institute, University of Minnesota                AARP Public Policy Institute


•   Generic drugs have long been a means                    $365 in 2017. On average, older Americans
    of helping consumers and payers reduce                  take 4.5 prescription drugs every month.
    prescription drug costs, currently accounting           Consequently, older adults who use generic
    for nearly 90 percent of all retail prescriptions       prescription drugs are likely to have
    filled in the United States.                            experienced an average annual retail cost of
•   In 2017, retail prices for 390 widely used              drug therapy of about $1,642 in 2017.
    generic prescription drugs fell by an average of        — This amount is roughly 6 percent of the
    9.3 percent. In contrast, the general inflation           median income for Medicare beneficiaries.
    rate was 2.1 percent over the same period.
    — This followed two consecutive years (2015
                                                        •   In 2017, the average annual price of therapy
                                                            for widely used brand name prescription
        and 2016) of substantial generic drug price         drugs was more than 18 times higher than
        decreases; the previous two consecutive             the average annual price of therapy for
        years (2013 and 2014) saw increases in              generic prescription drugs ($6,798 v. $365,
        generic drug prices.                                respectively). In 2013, the price differential
•   All but 3 of the 390 generic prescription drug          between these same market baskets was
    products in the study’s market basket had a             substantially smaller ($4,308 vs. $751,
    retail price change in 2017.                            respectively).
    — 297 drug products (76 percent) experienced
        a price decrease, and the remaining 90
                                                        •   The availability of economically competitive
                                                            and lower-cost generic drugs will take on added
        (23 percent) experienced a price increase.          importance as more brand name drugs and
•   The average annual cost for a generic                   biologicals enter the market with unusually
    medication used on a chronic basis was                  high prices.
                                                                                   A ARP PUBLIC POLICY INSTITUTE

                                                                                                                   APRIL 2019




Average Annual Cost of Therapy for Widely Used Generic Drugs is More Than 18 Times Lower
than Cost of Therapy for Widely Used Brand Name Drugs in 2017




  Prepared by the AARP Public Policy Institute and the PRIME Institute, University of Minnesota, based on data from Truven Health
  MarketScan® Research Databases.



Average Annual Generic Drug Price Decrease Slows in 2017
after Two Consecutive Years of Substantial Price Decreases




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                                                                                           Full report available at
                                                                                           http://www.aarp.org/rxpricewatch.

                                                                                           For more reports from the Public Policy
 Note: Calculations of the average annual generic drug price change include the
                                                                                           Institute, visit http://www.aarp.org/ppi/.
 390 drug products most widely used by older Americans.
 Prepared by the AARP Public Policy Institute and the PRIME Institute, University
 of Minnesota, based on data from Truven Health MarketScan® Research
 Databases.




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