Washington, DC—Retail prices for brand name prescription drugs widely used by older Americans shot up by an average of nearly 13% in 2013, more than eight times faster than the 1.5% general inflation rate, according to a new AARP Public Policy Institute (PPI) report released today. The report reveals the highest average annual price increase since AARP began tracking prescription drug prices in 2004.

“Higher brand name drug prices can increase health care premiums, deductibles, and other cost-sharing for everyone with health coverage, even for those who don’t take medications,” said AARP Executive Vice President for Policy, Strategy and International Affairs Debra Whitman. “If these price increases continue, we’ll likely see more people—particularly older people, who are often on fixed incomes—stop taking life-saving medications because they simply can’t afford them, leading to higher health care costs down the road.”

“The relentless rise in brand name drug prices also has implications for taxpayer-funded programs like Medicare and Medicaid,” said Whitman. “Higher government spending driven by large price increases eventually affects all Americans in the form of higher taxes, cuts to public programs, or both.”

Almost two-thirds of older Americans take three or more prescription drugs in a given year. For those who take three brand name prescription drugs on a regular basis, their annual cost of therapy would have been more than $8,800 during 2013—more than double the cost seen eight years earlier.

Additionally, increased prices for brand name medications lead to higher out-of-pocket costs for consumers who pay coinsurance, or a percentage of their drug costs, instead of a fixed dollar amount.

According to the AARP PPI report, policymakers should focus on exploring options that reduce the impact of increasing prescription drug prices. AARP continues to work with Congress to help lower prescription drug costs by requiring manufacturer rebates for drugs purchased by Medicare Part D low-income subsidy beneficiaries, improving the approval process for generic versions of biologic drugs, and giving Medicare the authority to negotiate prescription drug prices with drug makers.

Highlights of the Rx Price Watch Report

• The average annual retail price increase for widely used brand name prescription drugs was more than twice as high in 2013 (12.9%) as in 2006 (5.7%).
• In 2013, the average annual cost of one brand name medication used to treat a chronic health condition was nearly $3,000, compared with nearly $1,500 in 2006.
• Retail prices increased for 97% of the 227 brand name prescription drugs in the study’s market basket.
• Seven brand name drugs had average annual retail price increases of over 30% in 2013.