U.S. drug prices outstrip other medical costs: GAO

A pharmacy employee dumps pills into a pill counting machine as she fills a prescription while working at a pharmacy in New York December 23, 2009.

LOS ANGELES (Reuters) - U.S. prices for brand-name prescription drugs rose at a faster rate than costs for other medical goods and services over the last four years, according to a new U.S. government report.

The nonpartisan U.S. Government Accountability Office found that the "usual and customary" price index for the top 100 commonly used drugs increased by an annual average of 6.6 percent from 2006 through the first quarter of 2010, compared with a 3.8 percent average annual increase in the consumer price index for medical goods and services.

The basket of drugs contained 55 brand-name medicines and 45 generic drugs.

Prices for the brand-name drugs rose by an annual average of 8.3 percent, while prices for the generics fell by 2.6 percent annually, according to the report.

When looking at the 100-drug basket by active ingredient -- meaning brand-name products and generics with the same active ingredient were considered as the same drug -- the GAO found that prices rose by about 2.6 percent a year.

"This report reminds us that this is an area where we should be looking for savings for taxpayers and beneficiaries," Democratic Rep. Pete Stark, a ranking member of the House Ways and Means subcommittee on health,

The Pharmaceutical Research and Manufacturers of America said it was "pleased" that the GAO took into account the mix of brand and generic medicines that patients actually use.

"The report's key finding shows prices have been increasing at a rate of 2.6 percent annually, which is lower than overall medical inflation," the trade group said in a statement.

(Reporting by Deena Beasley; Editing by Steve Orlofsky, Bernard Orr)