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AARP Reports Prescription Price Increases (sort of)

Posted Oct 28 2008 9:57pm
AARP has released its annual report on prescription drug price increases. Well, sort of. First, AARP excludes all generic drugs (more than half of drugs dispensed to seniors are generics). Then AARP narrows the basket to only the Top 193 brand-name drugs, introducing even more selection bias into the “study.”

The report contends that prices for generic drugs fell 2 percent. Well, sort of. Not all generic drugs, only 75 of them. Why not the top 193 generic drugs? The report also fails to mention that the gap between branded prices and generic prices is narrowing (in other words, generics aren’t as cheap as they once were). Just like previous years, AARP scales the study and narrows the list of products to get the desired outcome. Only by introducing selection bias into the study, can AARP get to 6.2 percent. Credible sources report prescription drug price increases were actually closer to 4.2 percent.

The study is also flawed in that in rests on wholesale price increases, not the prices paid by actual consumers, nor the price paid by the wholesalers through negotiated discounts. Ironically, it is precisely these negotiated discounts that AARP is lobbying for within Medicare (because the government is so effective in negotiating). If AARP wants negotiated discounts, why not include them in the study? Answer: Claiming a higher price increase than actually exists is helpful in AARP’s lobbying war. This report is a brilliant PR move from AARP!
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