GAO: Brand-Name Drug Prices Rise as Generic Prices Fall

By Staff Writer

March 15, 2011 at 08:00 PM

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Typical prices for a basket of 55 brand-name prescription drugs increased at an average annual rate of 8.3% as typical prices for a basket of 45 generic drugs fell at an average annual rate of 2.6%.

Researchers at the U.S. Government Accountability Office (GAO) have published those results in a drug price analysis prepared at the request of House Democrats.

The GAO researchers studied drug price data for a period that started in 2006 – the year Wal-Mart Stores Inc., Bentonville, Ark., started selling many generic drugs for $4 per prescription – and ended in the first quarter of 2010.

The researchers looked at the "usual and customary" prices for a basket of 100 popular drugs that included 45 generic drugs and 55 brand-name drugs.

The overall average annual price increase for all 100 drugs was 6.6%, compared with an average annual increase of 3.8% for the U.S. medical Consumer Price Index, John Dicken, a GAO director, says in a report describing the GAO's findings.

When the researchers included consumers' shift toward increased use of generic drugs in the computations, that cut the average annual increase in the prices for all 100 drugs studied to 2.6%, Dicken says.

- Allison Bell