Drug Prices Rising 10 Times Faster Than Inflation

Seniors' most commonly used brand name drugs are increasing at 10 times the rate of inflation, according to a report from the U.S. Senate.

U.S. Sen. Claire McCaskill, D-Mo., the top-ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee, released the report Monday, which is called "Manufactured Crisis: How devastating drug price increases are harming America's seniors."

The report found prices increased an average of 12 percent every year for the top 20 most commonly prescribed brand-name drugs under the Medicare Part D program from 2012 to 2017.

"Can you imagine if you went to an auto dealership and last year's exact model was being sold at a 20 percent mark-up, and then you went back the next year and it had happened again?" McCaskill said. "That's exactly what's happening in the prescription drug industry, where the cost of identical drugs skyrockets year after year. Everywhere I go Missourians are angry and upset about these price increases."

"This report demonstrates that the pricing decisions made by these drug companies are outrageous," McCaskill added.

Prices for 12 of the top 20 drugs have increased by more than 50 percent over five years, and the price for six of the drugs doubled in that time.

The drug Nitrostat, which is used to relieve chest pain, increased the most at 477 percent over five years, while Zostavax, which is prescribed for shingles, had the lowest percentage increase at 31 percent.

The report found that total sales revenue from the top 20 prescribed drugs increased by almost $8.5 billion -- although 48 million fewer prescriptions were written.

"Soaring pharmaceutical drug prices remain a critical concern for patients and policymakers alike," the report concluded. "Over the last decade, these significant price increases have emerged as a dominant driver of U.S. health care costs -- a trend experts anticipate will continue at a rapid pace."

Medicare beneficiaries' out-of-pocket spending on drugs is projected to increase from 41 percent of per capita Social Security income in 2013 to 50 percent in 2030, according to one independent study cited by McCaskill.

McCaskill, who is seeking reelection this year, recently introduced legislation to end taxpayer subsidies to pharmaceutical companies receive for prescription drug advertising each year.

The Pharmaceutical Research and Manufacturers of America, which represents leading pharmaceutical companies, criticized the report.

"This is yet another misleading report that ignores the robust negotiation that occurs between Medicare Part D plans, middlemen and biopharmaceutical companies," Juliet Johnson, a spokeswoman for PhRMA, told CNN. "Negotiated rebates can reduce list prices by as much as 30 to 70 percent for medicines used to treat diabetes, high cholesterol, and chronic respiratory illnesses. Notably, half of the 20 brand medicines in this report are used to treat these chronic conditions."

On Monday, the group cited new research from The Moran Company the average sales price for all Part B medicines has remained steady from 2007 to 2017 and was flatter than the Consumer Price Index for medical care. Moran concluded "prescription drugs and biologicals are not a key driver of increased costs for the Medicare Part B program."

The organization also launched a campaign Tuesday to promote the negotiated rebates and copay coupon programs the industry has implemented to help bring down costs for consumers, which they say are being blocked by "insurance companies and other middlemen."

Medicare can't directly negotiate drug prices, which could bring them down -- Democrats want to allow the agency to negotiate pricing but Republicans are opposed to the idea.

McCaskill's bipartisan legislation that increases competition for generic drugs was signed into law by President Donald Trump.

During his State of the Union address in January, Trump said his administration wants to "make fixing the injustice of high drug prices one of our top priorities."