Drug Makers Increased Prices Just Ahead of Discount Card, Study Says

Drug makers raised prescription prices by nearly triple the rate of inflation in the first three months of this year -- before Medicare began its pharmacy discount card program -- negating much of the savings the government promised to seniors, according to an AARP survey released Wednesday.

Prices rose by 3.4% among the top 200 brand-name drugs while inflation in general was 1.2% in the first quarter of 2004, the study said. It tracked the prices pharmaceutical companies charged drug wholesalers.

Most of the 10 best-selling drugs increased more than the average, led by Bristol-Myers Squibb’s Plavix. The price of the blood thinner increased by 7.9%, the study said.

Merck and Co. raised the price of Fosamax for osteoporosis by 4.9%, while the most popular forms of Celebrex, a pain reliever, and cholesterol-reducing Lipitor -- both made by Pfizer -- increased by 5% and 4.6% respectively.

“Manufacturers are offsetting discounts with prices that are higher than they otherwise would have been,” John Rother, AARP’s policy director, said at a news conference.

The Medicare card program began in June.

Medicare beneficiaries can buy the cards for $30 and get discounts on drugs they purchase at neighborhood pharmacies or by mail order. Poor people get the cards free, plus $600 a year to fill their prescriptions.

Mark McClellan, the Bush administration’s Medicare chief, said people who used the cards were seeing significant savings. “None of our beneficiaries should be paying anything close to list prices for drugs, and more help is available than ever before,” McClellan said.

Since the program began -- after the price increases -- the lowest prices available with a discount card have been essentially unchanged for Celebrex, Fosamax and Lipitor, three best-selling drugs that Associated Press has been tracking.

All can be bought at roughly the same prices through the online pharmacy drugstore.com and for much less in Canada.

AARP gave crucial backing to the new Medicare law, but has been a vocal critic of pharmaceutical manufacturers and their congressional allies who have resisted legalizing imports of prescription medicines from Canada and elsewhere. The seniors group also has urged drug makers to limit price increases to the rate of inflation, to no avail.

Rother singled out Bristol-Myers Squibb and Pfizer, which between them produce 12 of the 25 top-selling drugs. Bristol-Myers Squibb prices rose 7.2%, while Pfizer increased prices 4.8% in the first three months of 2004, AARP said.

Pfizer spokeswoman Laura Glick acknowledged the prices went up, but said those were annual increases that typically occurred in January.