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Rx DRUG PRICES GROW 9.5% IN 1987 AT MANUFACTURER LEVEL: INCREASE IS THIRD CONSECUTIVE ANNUAL INFLATION RATE BETWEEN 9%-10%; OTC PRICES UP OVER 5%

Executive Summary

Prescription drug price inflation leveled off in the fourth quarter of 1987, holding the annual price gain for 1987 below 10%, according to data from the Bureau of Labor Statistics' Producer Price Index. Based on December figures, Rx drug prices increased only 1.1% during the last three months of the year. The 9.5% price run-up at the manufacturer level for prescription drugs in 1987 represents the third year in a row drug prices have increased between 9% and 10%. The Bureau of Labor Statistics producer price data for 1986 and 1985 show annual inflation for prescription drugs at 9.6% for both those years. Although prescription drug price inflation at the manufacturer level has fallen below double-digit growth over the past four years, the rate of inflation remains consistent with the industry's near 10% annual price inflation through the 1980s. During the same period, producer prices have remained relatively flat; in fact, the Bureau of Labor Statistics' producer price index for finished goods finished down for the year in 1986 for the first time since 1963. The index for finished goods increased 2.2% (unadjusted for seasonal fluctuations) in 1987. For the year, codeine and codeine combination analgesics (up 21.2%), narcotic analgesics (up 18.8%), and psychotherapeutics (up 18.3%) showed the greatest price flexibility during 1987 among prescription drug categories listed by the Bureau of Labor Statistics, followed closely by cancer therapy products, with a composite price gain of 15.3% Other prescription drug categories with price gains of 10% or more at the manufacturer level included antihypertensive drugs (up 14.4%), antispasmodic/antisecretory agents (up 14%), analgesics (up 13.3%), ophthalmic and optic preparations (up 12.3%), and diuretics (up 11.8%). Only hospital solutions (down 5.7%) and hormones (down .3%) showed price declines for the year among drug categories listed by the Bureau of Labor Statistics. Among related drug categories, the producer price index for non-prescription drugs increased 5.1% in 1987. OTC internal analgesics showed the biggest price gain (up 11.5%), followed by decongestants (up 7.1%). Chart omitted.
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