New YorkTimes, April 9, 2007
For almost 20 years, college health centers have been able to purchase contraceptives at nominal prices. This was not a tax-funded subsidy. It was a financial incentive that gave drug manufacturers an exemption from Medicaid pricing rules so they could sell contraceptives and other products to certain charitable groups, like the college clinics, at an extreme discount. In response to concerns that drug companies were abusing this privilege, language was sewn into legislation in 2005 to close a loophole. It also inadvertently slashed this important benefit for clinics and their patients.
On some college campuses, the price of brand-name contraceptives has risen from the neighborhood of $5 per month to $40 or even $50. Switching to a generic is an option in some cases, but it can still entail a 300 percent price increase. Generics often run at about $15 per month. Newer contraceptives, like the NuvaRing, which contains a very low hormone dose and does not require a daily action that is easily forgotten, are not yet available generically. Many students are priced out of the market.
The spike in price affects more than just consumers of contraceptive devices and pills. College and university health clinics sold these products for a small profit -- buying them at, say, $3 and selling them at $5. Even on a small campus, these dollars add up quickly. The money was an important part of health center operating budgets, paying for classes and even subsidizing more expensive medications.
The Centers for Medicare and Medicaid Services could reapply these exemptions with the stroke of a pen. If they do not, Congress should restore this much-needed benefit.
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