Prescription Drugs

Soaring prescription drug prices have burdened many Americans, particularly the elderly, who often must pay for these drugs out of pocket because they lack health insurance with drug benefits. Price increases for 29 widely used drugs that GAO reviewed exceeded the inflation rate for the six-year period ended in 1991. Prices for 19 of the drugs, in fact, increased by more than 100 percent--with some surpassing 300 percent. By comparison, the rise in inflation for this same period was about 26 percent. Companies' explanations for the increases were vague and included few details because they consider information on pricing decisions to be confidential and proprietary. Among the factors they cited were increased research and development costs, expansion of manufacturing facilities, increasing product liability lawsuits, an accelerated approval process for generic drugs that shortens the period when companies can recoup their research and development costs, and inflation.

GAO found that: (1) the prices for most of the drugs increased more than the consumer price indexes for the 6-year period ending December 31, 1991; (2) the maximum price increases were generally greater than 100 percent; and (3) companies gave various general and undetailed reasons for the price increases because they considered pricing information confidential and proprietary.