Part D effect on US drug prices: up or down?

The political battle over the US Medicare Part D prescription drug benefit has entered a new phase, with conflicting claims over whether the introduction of the program has caused drug prices to rise or fall.

According to a report in the New York Times, which has been critical of Medicare Part D since its inception, "prices of the most widely-used prescription drugs rose sharply in this year's first quarter," quoting two campaigning organizations, the American Association for Retired People and Families USA. John Rother, the AARP's policy director, told the NYT: "when the manufacturers' wholesale prices increase, it gets passed through the system, regardless of who the final purchaser is." The argument was firmly dismissed by the Pharmaceutical Researchers and Manufacturers of America, which issued a statement claiming the AARP figures were "erroneous," noting that drug consumer prices had risen less than 2% since January 1.

Mohit Ghose, speaking on behalf of the American Association of Health Plans, said that insurers were reducing drug spending increases by switching to generic drugs from branded products. The Wall Street Journal also reported that major purchasers of drugs were negotiating discounts for their customers, for instance the US Department of Veterans Affairs, which provides prescription drug coverage for many older US citizens had cut the price it pays for US drugmaker Schering-Plough's Levitra (vardenafil, licensed from Germany's Bayer) from $4.90 to $2.58 per tablet.