Generic Drug Prices Fall for Fifth Consecutive Year

Author: AARP
Published: 2011/07/21 - Updated: 2011/10/28
Peer-Reviewed: N/A
Contents: Summary - Main - Related Publications

Synopsis: Prices for widely used generic drugs fell by average of 7.8% as many seniors are reaching the coverage gap in Medicare prescription drug coverage known as the doughnut hole. As seniors reach dreaded doughnut hole, group urges them to consider generics to help reduce drug costs.

Main Digest

As seniors reach dreaded doughnut hole, group urges them to consider generics to help reduce drug costs.

Prices for widely used generic drugs fell by an average of 7.8 percent in 2009 - the fifth consecutive annual price decrease - while general inflation fell by 0.3 percent, according to AARP's latest Rx Price Watch report. The report by AARP's Public Policy Institute comes as many seniors are reaching the coverage gap in Medicare prescription drug coverage, known as the doughnut hole.

"This report highlights an important opportunity for people with Medicare Part D plans - and anyone taking a prescription drug - to reduce their prescription drug costs," said AARP Senior Vice President Cheryl Matheis. "Switching to less-costly generics now can dramatically cut your pharmacy bills and might help keep you out of the doughnut hole."

The Centers for Medicare and Medicaid Services report that up to 4.5 million seniors will reach the Medicare Part D coverage gap - or doughnut hole - this year. On average, seniors who reach the drug coverage gap fall in during late July.

While in the coverage gap, Medicare Part D plans do not cover seniors' prescription drug costs but they must continue to pay their premiums. Under the Affordable Care Act, Part D enrollees are now receiving discounts on their brand name and generic drugs while they are in the coverage gap. These discounts will gradually increase until the gap is closed in 2020, but generic drugs typically cost a fraction of brands, even after the discounts.

AARP's Doughnut Hole Calculator can help seniors and their loved ones sort through the numbers and find lower cost alternatives to their prescriptions. Customized for each user's Medicare Part D plan and drug regimen, the calculator produces a list of possible drug options and a personalized letter to help seniors start a conversation with their doctors.

Matheis added:

"More and more seniors will reach the doughnut hole in the second half of the year. If you or an older loved one is still taking a brand name drug, it's time to have a conversation with your doctor. We know that Americans begin skipping doses and refills when faced with high drug costs, which can lead to more serious health problems down the road, so switching to a generic now can save you money at the pharmacy and help keep you healthier."

Today's report is one in a series produced by AARP's Public Policy Institute examining price trends for brand name, generic and specialty prescription drugs widely used by people participating in the Medicare Part D program. AARP's last report, released in March, noted that prices for widely used brand name drugs increased by an average of 8.3 percent in 2009.

The Rx Price Watch report studied retail prices between 2005 and 2009 for 185 generic drugs widely used by people in Medicare Part D plans.

For the 164 generic drugs that were on the market for the entire five year period, retail prices dropped cumulatively by an average of 35 percent.

Generics with the largest price decreases included popular antidepressants sertraline (generic version of Zoloft) and paroxetine (generic version of Paxil), as well as cholesterol reducer simvastatin (generic version of Zocor).

In 2009, retail prices for sertraline 100 mg and 50 mg tablets fell by 44.5 percent and 42.2 percent, respectively;

the retail price of paroxetine 40 mg tablets fell by 32.5 percent;

and the retail price of simvastatin 80 mg tablets fell by 32.9 percent.

The list of prescription drugs analyzed in the AARP Rx Price Watch reports is based on the drug products most widely prescribed to people in Medicare Part D. Price changes are measured using retail prices as reported by the Thomson Reuters MarketScan® Research Databases.

AARP's Doughnut Hole Calculator is available free to the public at

The full AARP Rx Price Watch report is available at

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