What is $110 Billion in Rx Price Increases Worth in New York State?

It’s well known that prescription drug prices are skyrocketing in America. Price increases for brand name drugs have far exceeded the rate of inflation since at least 2006, according to AARP’s Rx Price Watch report. And, the average annual cost for just one brand name drug taken on a chronic basis was about $6,800 in 2017, almost $1,000 more than in 2015. However, it’s not just patients paying for greedy Big Pharma practices that help keep drug prices high— it’s also taxpayers.

As part of AARP’s Stop Rx Greed campaign to help lower drug prices, the AARP Public Policy Institute (PPI) released a new analysis in October 2019 showing that Medicare (meaning beneficiaries and taxpayers) spent an extra $110 billion in recent years just on drug price increases that exceeded general inflation. That is an enormous amount of unnecessary spending.

So what does $110 billion look like in New York State? More than New York’s total state spending in 2017, which – not counting federal pass-through aid – amounted to $99 billion.
It’s also worth a whole lot of gas and groceries, as illustrated in a new AARP interactive infographic. We ran the numbers, which show that $110 billion in the U.S. could:
· Cover rent for 9 million American families for a year
· Pay a year of college for 9 million American students
· Buy groceries for 25 million American families for a year
· Buy gasoline for 56 million American families for a year
Let that sink in for a moment.

To reach the $110 billion figure, PPI analyzed 2013-2017 data from the Center for Medicare & Medicaid Services’ Medicare Part D Spending Dashboard and Medicare Part B Spending Dashboard. PPI compared annual price changes for each drug to what they would have been if limited to the rate of general inflation and used the revised drug prices to generate updated Medicare spending estimates.
AARP New York is fighting to lower drug prices for not only seniors but for all New Yorkers. We’re pushing for action on state legislation and policies that will lead to meaningful, substantive reform and finally provide New Yorkers relief from high prescription drug prices.

We support bills and are urging Governor Andrew Cuomo to propose as part of his next state budget:
- Creation of a safe importation program of prescription drugs that sell in Canada and other countries at substantially lower costs than in New York;
- Increasing the state Attorney General’s power to prosecute Rx price gouging;
- Requiring disclosure of “pay to delay” deals in which brand name drug makers pay generic manufacturers to postpone the availability of their less expensive alternatives, and;
- Expansion of the state’s Elderly Pharmaceutical Insurance Coverage program to subsidize the cost of prescription medications for more more middle-class New Yorkers.
Earlier this year, the state Legislature passed a bill to prevent health plans from increasing enrollees’ out-of-pocket prescription drugs in the middle of a contract year. The bill will go to Governor Cuomo before the end of 2019.

AARP New York will not stop fighting until everyone can afford the medications they need.
To learn more about AARP’s efforts to Stop Rx Greed, visit www.aarp.org/rx.