Prescription drug prices rise four times faster than inflation; biggest jump in six years

Two reports released by the American Association of Retired Persons (AARP) found that prices of brand-name prescription drugs in the United States rose nearly four times as fast as the inflation rate in the first quarter, while the prices of generic drugs remained unchanged.

The most widely prescribed brand-name drugs rose by an average of 3.9 percent in the first quarter, while inflation was at 1.1 percent. The AARP said this year's first-quarter price jump was the biggest in the six-year time span covered by the report. Conversely, this quarter marked the first time makers of generic drugs didn't raise prices since the AARP began its tracking in 2001.

"Not only are (generic drugs) cheaper, but the gap between the price for generics and the price for brand-name drugs is growing," said Larry Levitt, vice president of the Kaiser Family Foundation, a California-based health care non-profit.

The largest price increase was for the popular sleeping drug Ambien by Sanofi-Aventis SA -- recently linked with bizarre sleep behaviors such as sleep driving -- which rose 9.9 percent in the first quarter. Pfizer's cholesterol drug Lipitor -- the world's best-selling drug -- experienced a 6.5 percent price increase.

Ken Johnson, a spokesman for the Pharmaceutical Research and Manufacturers of America (PhRMA), called the AARP reports' conclusions "erroneous" and said the "good news" for American seniors was that "drug prices are growing at a rate identical to medical inflation."

However, the AARP called the price increases a "disturbing reversal," since prior to this year's first quarter, drug price gains had been slowing since mid-2004.