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Drug Firms Start Holding Line on Prices : Pharmaceuticals: The companies may be trying to preempt laws that would limit increases.

January 12, 1992|From Associated Press

NEW YORK — It's a bitter pill to swallow for many pharmaceutical companies, but they are beginning to respond to harsh criticism over the cost of drugs.

Experts say the days of rampant price increases may be numbered.

As political pressure mounts for price regulation, companies are displaying a new sensitivity to what drugs cost and a willingness to hold the line on increases.

"Raising prices 20% a year in a slow-inflation environment is impossible. They just can't do it anymore," said Marc O. Mayer, an analyst with Sanford C. Bernstein.

Time was when drug companies "could do whatever they wanted and get away with it," Mayer said. Today, they are trying to prove they are good citizens.

Pfizer Inc. and Merck & Co. have made general pledges to contain price increases. This week, Bristol-Myers Squibb Co. expanded discounts to some government purchasers, going beyond a 1990 law requiring rebates to state Medicaid programs.

Eli Lilly & Co. recently reduced prices on several products it sells to the federal government, with insulin dropping to $5.23 per dose from $6.75.

Bristol-Myers has developed programs to help patients with limited resources buy Videx, which slows the progression of AIDS.

"The whole industry is under scrutiny and pressure," said Peter Wolf, a spokesman for Warner-Lambert Co.

Drug companies typically hold down prices for large purchasers like hospitals and health maintenance organizations, which try to bargain much like a car buyer challenging the sticker price on a new vehicle.

"Many hospitals get products at 40 to 60% less than what the retail pharmacy pays," said Stephen Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota.

The consumer who fills her prescription at the corner drugstore has no viable avenue for complaint. Unlike other products, "the consumer can't express price dissatisfaction by refusing to buy," Schondelmeyer said.

Consumers rely on advice of their physicians, who, critics say, are courted persistently by sales representatives of major drug companies.

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