Pharmacy's "Usual and Customary" Rx Prices Rise Faster for Branded Drugs

DECEMBER 01, 2004
Ken Rankin

The usual and customary prices charged by community pharmacies for brand name prescription drugs are rising significantly faster than retail prices for generics, investigators for the US Government Accountability Office (GAO) said in a report to Congress.

According to that GAO study, "average usual and customary prices for 52 frequently used brand drugs increased about 3 times faster than for 47 frequently used generic drugs." The investigators collected data on retail pharmacy pricing practices from the records of pharmaceutical assistance programs for the elderly in 2 states. Their findings indicate that from January 2000 through June 2004 the average usual and customary prices for the branded drugs rose by 26.4%—a 5.5% average annual rate of increase. In contrast, they told Congress, pharmacy prices for generic drugs climbed by only 8.3%—a 1.8% average annual rate of increase.

The GAO's researchers found little difference in the rate of Rx price increases for the types of drugs typically used by seniors and medicines commonly used by non-Medicare patients. Average usual and customary prices for 77 prescription drugs frequently used by Medicare enrollees increased by 21.8% during the 41/2 -year study period, while pharmacy prices for a group of 79 drugs used by non-Medicare patients climbed by 22.8%.