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Trends in Retail Prices of Prescription Drugs Widely Used by Older Americans, 2006 to 2020

By Leigh Purvis, and Dr. Stephen Schondelmeyer (PRIME Institute, University of Minnesota),
AARP Public Policy Institute
 
Published January 16, 2024
Rx Price Watch Expert: Some Relief for Consumers is in Sight
AARP Studios

Prescription drug price increases affect consumers, employers, private insurers, and taxpayers who fund programs like Medicare and Medicaid. Spending increases driven by high and growing drug prices will eventually affect all Americans in some way. Those with private health insurance will pay higher premiums and cost sharing for their health care coverage. Over time, it could also lead to higher taxes and/or cuts to public programs to accommodate increased government spending.

Read the full report.

This report is the latest in the AARP Public Policy Institute’s Rx Price Watch series and presents both annual and 15-year cumulative price changes through the end of 2020 for a combined set of 943 prescription drugs widely used by older adults.

Key Findings

Average price increases for prescription drugs widely used by older Americans, including Medicare beneficiaries, outstripped the price increases for other consumer goods and services between 2006 and 2020. 

  • In 2020, the average annual cost for widely used prescription drugs used to treat chronic conditions was more than $26,000 per drug per year. This cost was:
    • More than 40 percent higher than the average Social Security retirement benefit ($18,034),
    • Nearly 90 percent of the median income for Medicare beneficiaries ($29,650), and
    • More than one-third of the median US household income ($69,639).
  • The average annual cost of drug therapy for one drug used on a chronic basis would have been more than $14,000 lower in 2020 (i.e., $12,112 v. $26,393) if retail price changes had been limited to the rate of general inflation between 2006 and 2020. 
  • The average price of therapy for the AARP combined market basket greatly exceeded the average price of therapy for the brand name and generic market baskets. The higher price of therapy for the combined market basket is due to the markedly higher price level of specialty drug products. In 2020:
    • The average annual cost of therapy for widely used generic drug products was $679,
    • The average annual cost of therapy for widely used brand name drug products was $6,604, and
    • The average annual cost of therapy for widely used specialty drug products was $84,442. 

Prescription Drug Price Growth

The continued increases in overall prescription drug price growth despite substantial price decreases among widely used generic drugs could be an indication that public and private health care payers can no longer rely on lower-priced generic drugs to counterbalance the price growth trends seen in the brand name and specialty prescription drug markets. If prescription drug prices and related price increases continue unabated, their costs will prompt increasing numbers of older Americans to stop taking necessary medications due to affordability concerns.

This report is the latest in the AARP Public Policy Institute’s Rx Price Watch series. Separate reports analyze price changes for widely used brand name, generic, and specialty drug products. 

These AARP Public Policy Institute reports are a continuation of our Rx Watchdog report series that has been tracking manufacturer price changes for widely used prescription drugs since 2004.

Previous Reports

2023

2021

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010 

Suggested citation:
Schondelmeyer, Stephen W., and Leigh Purvis. Rx Price Watch Reports. Washington, DC: AARP Public Policy Institute, January 17, 2024. https://doi.org/10.26419/ppi.00219.001.

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