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Mary Altaffer

After a stroke, Gwen Owens was forced to give up her job as a phlebotomist and go on disability.

Subsequent back and shoulder surgeries added to her medical woes -- and her drug bills. And each time drug prices go up, she feels the pain a little more.

"I couldn't afford what I was taking before," said the 63-year-old grandmother of four from Greenville. "With the price of the drugs going up, it makes it even harder."

While inflation remained flat for the year ending in March 2010, prices for brand-name drugs most widely used by Medicare beneficiaries went up nearly 10 percent, according to AARP. That's the biggest spike since they began tracking those prices in 2002.

"Last year, the inflation rate was 0.3 percent, but drug prices went up over 9.7 percent," said John Rother, executive vice president for policy at AARP. "That's quite a contrast."

And the price hikes don't just affect people on Medicare.

Rother said the population from age 50 to 64 represents the biggest increase in people taking drugs, and for some of the most common conditions, such as high blood pressure and diabetes. "The compounded effect is to raise the cost of prescription brand-name drugs way beyond people's ability to pay," he said, "particularly if they don't have insurance."

The Pharmaceutical Research and Manufacturers of America, the trade group for the drug industry, said the report is based on incomplete information.

"The report does not take into account discounts and rebates generally negotiated between drug manufacturers and payers, which can significantly lower the cost of brand-name medicines, ultimately benefiting patients," PhRMA senior vice president Ken Johnson said in a statement.

"Also," he said, "the report's conclusions ignore the reality that prescription medicines represent a small and decreasing share of growth in overall health care costs in the United States."

Johnson added that drugs also can help keep some health costs down by reducing the need for other more expensive interventions.

But Rother said drug companies raise prices because "there is no countervailing pressure." On average, the industry's profit margin is about 20 percent, he said. "We want them to succeed, to be innovators. But there's a need to balance that with reasonable costs."

AARP also found that the average annual cost for a single brand-name drug was $2,190 while the average annual cost for taking three of these drugs was $6,580.

Specialty drugs, including biologics and injected drugs to treat cancer and other serious illnesses, also increased an average 9.2 percent, according to AARP. They can cost more than $20,000 a month. "We are going to see more and more of these drugs," Rother said. "The question is how are people going to afford them?"

The good news, he said, is that generic drug prices fell by 9.7 percent.

But prescription drug use is on the rise. Medco Health Solutions, a New Jersey-based pharmacy benefits manager with 65 million members, said utilization grew 1.3 percent between 2008 and 2009 while plan spending increased 3.7 percent.

And the U.S. Centers for Disease Control and Prevention reported last year that in 2006 almost half of all Americans had taken a drug in the previous month, most for pain, high cholesterol and depression.

In South Carolina, about 713,000 people on average are on Medicare and they spend about 30 percent of their income on out-of-pocket medical costs including drugs, said Teresa Arnold, legislative liaison for AARP South Carolina. Another 117,000 South Carolinians between ages 50 and 64 are uninsured, she said.

"To see brand-name drugs skyrocket like this, especially at a time when the rest of the economy went nowhere and people are having so much trouble, is disheartening," Arnold said.

Owens said that at the beginning of the year, she was talked into switching to a Medicare Advantage plan that didn't include drug coverage, leaving her responsible for all her drug costs. Because she gets too much disability to qualify for Medicaid, she asked her doctor to find the cheapest medicines possible, leaving her with a drug bill of $450 a month -- about a third of her $1,300 disability payment.

"It's not easy to live on that kind of money," she said.

Higher drug costs can lead to reduced benefits and higher premiums, according to AARP, which reports Part D premiums this year are 11 percent higher than in 2009, and that pushes more people into the coverage gap, where they must pay all their drug costs.

Rother said consumers should look for generic alternatives when possible, though not every drug has a generic equivalent. AARP also has called on Congress to legalize the importation of drugs from other countries and allow Medicare to bargain with drug companies over prices.