Recently the Upjohn Co. began marketing Depo Provera - a drug that has been sold for two decades to treat cancer - as a contraceptive. Michael S. Policar, vice president for medical affairs of the Planned Parenthood Federation, says the price went from $12 to $29 for a contraceptive dose.
If Bill Clinton and Congress are going to help provide affordable health care, they must curb the excesses of the country's last unregulated monopoly, the pharmaceutical industry.Americans spend $67 billion yearly on prescription drugs. Although drugs constitute only 7 percent of the nation's total health-care bill, they represent the fastest growing portion of health costs, rising 20 percent faster than overall medical costs and 250 percent faster than the Consumer Price Index from 1985 to 1991.
The reason for these skyrocketing increases? Drug companies can get away with them.
Each company has a monopoly on most of the drugs it produces and can extract whatever price it likes from consumers, who have little choice but to pay.
The government usually grants the manufacturer of a new drug a patent, often up to 22 years. It is true that if a company invests money and time creating something unique, it should be able to market the product without a rival capitalizing on its work.
But with drugs, the government grants a monopoly on a product that may be crucial to health and well-being.
The government should treat drug companies the way it treats other monopolies: It should regulate them.
Just as companies are required to give medical research to the Food and Drug Administration to have their drugs approved, they should be required to provide information on costs in order to get approval for a proposed pricing structure.
Drug companies obviously would fight such regulation. They claim that they price drugs as they do to compensate for huge investments in research and development.
But the Senate Committee on Aging said in a report that more money is spent on marketing drugs than on developing them.
Drug companies would claim that restricting profits would make them less likely to discover innovative drugs. But today's system doesn't foster innovation.
According to the FDA, between 1981 and 1988, 84 percent of the new drugs produced by the 25 biggest drug companies had little or no potential for improving patient care. Only 3 percent were considered significant advances.
In addition to saving billions of dollars in consumer, insurance company and Medicare and Medicaid costs, regulation would allow the government to require drug companies to focus their investments to meet public needs.