AARP, PhRMA clash over drug pricing

On 16th November 2009, AARP issued a report that found that manufacturer prices for brand name drugs had risen over the last year, despite a negative general inflation rate. By contrast, the report also found that generic drug prices had fallen over the same period. The report looked at drugs widely used by Medicare Part D beneficiaries; in the case of brand name drugs, the report looked at 219 products, and found that 96% of these had seen price increases, with the remaining 4% seeing no change. Of the top 25 products, as ranked according to prescriptions processed by the Medicare Part D plan provider during 2006, price rises ranged from between 4.8% and 19.7%. The 4.8% rise was for the fourth-ranked drug, Wyeth's Protonix 40 mg tablets (pantoprazole sodium), whilst the 19.7% rise was for Boehringer Ingelheim's Flomax 0.4 mg capsules (tamsulosin hydrochloride), which was ranked at number 17. The top-ranked drug was AstraZeneca's Nexium 40 mg capsules (esomeprazole), which saw a rise of 7.1%, whilst the second-ranked drug, Bristol-Myers Squibb's Plavix 75 mg tablets (clopidogrel bisulphate) saw an increase of 8.2%.

With regard to generics, although AARP's report saw prices decreasing by an average of 8.7%, the breakdown of the top 25 generics paints a slightly different picture. Only four of the top 25 saw any price changes, but in this case, all four had significant price falls. The four were all from Teva Pharmaceutical Industries, and were: simvastatin 20 mg tablets (ranked at number one), which saw a price drop of 77.7%; simvastatin 40 mg tablets (ranked at number two), which saw a price fall of 79.8%; metformin 500 mg tablets (ranked at number four), which saw a drop of 85.2%; and pravastatin 40 mg tablets (ranked at number 10), which saw a drop of 68.9%. Teva accounted for nine of the top 25 drugs, with Sandoz accounting for another nine, and thus between them accounting for 72% of the top 25.

Unsurprisingly, PhRMA, the Pharmaceutical Research and Manufacturers of America organisation, was unimpressed with AARP's report and challenged its findings. Accusing AARP of having a 'skewed view of the world', PhRMA began by arguing that looking at drug prices overlooked the savings they provide in the form of fewer medical procedures needing to be carried out and increased productivity through better prevention and management of diseases. However, turning to the price statistics themselves, PhRMA argued that AARP had taken a selective view, which did not take into account discounts and rebates for brand name drugs. PhRMA noted that the Medicare Trustees had reported that rebates in the Medicare drug prescription programme had reached 20% to 30% for many brand name drugs, and added that there was a 50% discount companies would provide to most seniors and disabled Americans who had reached the 'donut hole' in the Medicare Part D programme. PhRMA was able to provide data from IMS, the Centers for Medicare and Medicaid Services (CMS) and the Congressional Budget Office (CBO) which countered AARP's claims. IMS data showed that prescription drug spending growth had fallen to 1.3% in 2008, whilst the CBO found that drug expenditures grew by 3.2% between 2004 and 2007.

The charges and counter-charges between AARP and PhRMA shows above all that when it comes to healthcare costs, the old maxim remains the case that there are lies, damn lies and statistics. Both organisations can be accused of being selective in their figures, with AARP taking figures that, in not taking into account deals and rebates, provide arguably misleading results. For its own part, PhRMA can also be accused of the same, using figures spread over longer time frames than the AARP report. As is often the case, the truth of the matter no doubt lies somewhere between the two.

Ian Platts, Editor, World Generic Markets