PhRMA Statement on AARP Drug Pricing Report

PhRMA Statement on AARP Drug Pricing Report

Washington, D.C. (March 6, 2012) — Pharmaceutical Research and Manufacturers of America (PhRMA) Senior Vice President Matt Bennett issued the following statement:

“AARP has released yet another misleading pricing report that ignores key facts about the marketplace for prescription medicines and paints an inaccurate picture of prescription drug spending in the U.S.

“Unlike what AARP suggests, numerous sources clearly show that in recent years, drug costs have been growing at historically slow rates.  In fact, government data show that in 2010 retail drug spending grew by just 1.2 percent, the slowest rate of growth on record.

“AARP acknowledges that many brand medicines in their analysis have a generic version available, yet their findings count every prescription as if it was filled with a brand medicine, even when most patients fill the prescription with a generic. As a result, the AARP studies completely miss the substantial savings that patients experience when a generic substitute becomes available.

“It should be noted that highly respected economists have concluded that AARP’s methods paint an inaccurate picture of what is really happening in the marketplace for prescription medicines. In direct contrast to AARP’s claims, MIT and IMS Health researchers have found that in recent years, the cost of medicines commonly used by seniors has decreased, not increased. For the top 10 therapy areas in Medicare Part D, the average cost per day fell from $1.50 in 2006 to $1.00 in 2010, and is projected to further decline to $.65 by 2015.

“A meaningful analysis of prices should reflect the way the market works by taking into account the mix of brand and generic medicines patients actually use. Generic drugs result in long-term savings to the health care system, but these savings are only possible because innovator companies conducted the extensive research to develop the original brand medicines. The innovators’ work and investment leads over time to generic copies that consumers use at low cost for many years.

“Importantly, despite their small share of health costs – relative to other health services – medicines are yielding major health advances. For instance, prescription medicines have played a key role in the dramatic declines in death rates resulting from cancer, heart disease and HIV/AIDS in recent years. Our companies' continued commitment to innovation is the driving force behind such medical progress.”

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