Toward Open Pricing

When a doctor writes a prescription, his patient often takes it to the nearest drugstore and learns only when the pills are handed to him what they will cost. Last week the Federal Trade Commission proposed new rules that would permit pharmacies to advertise prices for prescription drugs so that patients can shop for the best bargains. By doing so, the FTC estimates, consumers could save $130 million a year.

Such advertising is now banned by law in 33 states, and by agreement among druggists' associations in most areas of the 17 others. Pharmacists argue unconvincingly that these restrictions are necessary to uphold the dignity of their profession against cut-price sellers. They also fear that open price slashing by the 10,600 chain-drug outlets would drive some of the 40,000 independent pharmacies out of business.

To FTC Chairman Lewis Engman, though, "it is a curious set of values that says that the consumer may be given full information about discretionary purchases such as deodorants and mouthwash but cannot be given information that will help him save money on . . . drugs that a doctor has prescribed as essential to his good health." The FTC's proposed rules would override all state laws forbidding drug-price ads and make it a crime punishable by a $10,000 fine for any person or association to hinder disclosure of drug prices.

Worth the Price? To put these rules into effect will take at least a year. But if the agency eventually does prompt more price ads, buyers may get a shock. One study found that pharmacies in the San Francisco area charged 28 different prices, ranging from $2.50 to $11.75, for 100 tablets of Raudixin, a drug that reduces high blood pressure. Druggists contend that the stores charging the higher prices provide extra services like free delivery and charge accounts. FTC officials retort persuasively that customers should know the charges in advance so that they can decide for themselves whether the service is worth the price.

An eventual FTC ruling on drug-price ads may presage a probe into the agreements by medical and bar associations that set fees charged by doctors and lawyers. Engman, who has vigorously pushed antitrust actions in his two years at the FTC, has talked before about "conspiracies of silence" concerning prices in other professions. Last week he said that the fact that druggists' antiadvertising agreements resemble understandings among other groups does not excuse the pharmacists but "may be a reason to take a hard look at doctors and lawyers."

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