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InsiderOnline Blog: March 2012

Get Ready for Really Good Contraception!

Big Pharma will be the biggest beneficiary of the Department of Health and Human Service’s contraception mandate, writes Avik Roy (The Atlantic, March 6):

The reason why birth control is so cheap is because there are no longer any patents covering the use of a combination of estrogen and progesterone for the purpose of oral contraception. The first Pill, Enovid, was made available in the U.S. in 1957. These hormones are very inexpensive to synthesize and manufacture.

Under the current system, drug companies have an incentive to compete on price. If you have health insurance that covers birth control today, your insurer is likely to charge you a higher co-pay for expensive, “branded” versions of birth control over cheaper, generic ones. If you don’t have health insurance, and you’re buying the Pill directly from the pharmacy at Wal-Mart, you have even more incentive to shop on price.

Under the new mandate, this price incentive disappears. Insurers will be required to pay for any and all oral contraceptives, without charging a co-pay, co-insurance, or a deductible. This “first dollar coverage” of oral contraception kills the incentive to shop based on price.

If history is any guide, this significant change will drive up the price of oral contraception. Today, Tri-Sprintec costs $9 a month. In 2020, don’t be surprised if it costs $30. Drug companies will be able to market “branded” contraceptives at premium prices, knowing that women are free to choose the most expensive, designer product because it will cost them the same as the cheapest generic. Prepare yourself for multi-million-dollar Super Bowl ad campaigns from competing manufacturers. […]

The contraception contretemps is a case study in how thoughtless laws and policies drive up the cost of health care, making it less accessible to those who are most in need.

Posted on 03/08/12 10:19 PM by Alex Adrianson

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