11/14/96 -- 5:30 PM

Drug Prices ,0298

NEW YORK (AP) - Prescription drug prices rose a moderate 2 percent in the third quarter compared to last year as sharper increases in brand name medicines were partly offset by continued steep declines in generics, a survey said Thursday.

``Our data indicate that pharmaceutical inflation has been accelerating somewhat through 1996, rising from 1.3 percent in the first quarter and 1.8 percent in the second quarter, said Robert Merold, a vice president at IMS America, which does research for the drug industry.

Brand name drugs rose 3.2 percent during the third quarter while generics - which are copies of branded drugs whose patents have expired - fell 10.1 percent, said the quarterly survey by the Plymouth Meeting, Pa.-based company. Generics often cost one-third the price of branded drugs or less.

The IMS survey examines the wholesale prices for 20,000 drugs paid by druggists, hospitals, clinics, nursing homes and some health maintenance organizations. The nation's rate of overall wholesale inflation - the producer price index - went up 2.9 percent during the same period, Merold said.

Generic drugs, because of their increasing popularity, have become a highly competitive business. With more and more manufacturers offering similar versions of the same medicine, prices have plummeted, depressing manufacturer profits.

Prospects are for continued increases in brand name drugs. Drug companies have in the past year introduced new medicines for a variety of afflictions including AIDS, cancer, osteoporosis, ulcers, and obesity. Newer drugs nearly always carry higher price tags than their predecessors.

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