Up until last year, federal law enabled pharmaceutical companies to supply prescription contraceptives to university health centers and low-income community clinics at sharply discounted rates. These savings were conveyed to students and others in the form of lower contraceptive prices. But a 2005 federal law eliminated such discounts by forcing drug manufacturers to pay higher fees to include these medicines under Medicaid, the government-subsidized health plan.
In anticipation of the price hike, many institutions, including Harvard, purchased the cheaper contraceptives in excess, enabling them to offer lower prices throughout the summer and fall. When these stockpiles ran out, students and others saw birth control prices increase three to four-fold.
“With such a large denominator of students on the University health plan, and such a large number of medications offered through the plan, there is a big enough base to absorb such price fluctuations in one particular drug,” said Mark L. Hurwitz, finance director for health plans at University Health Services (UHS).
Although most universities offer health plans to their students, many require that students procure separate prescription drugs through an external insurance plan. UHS, however, provides direct prescription coverage for the roughly 20,000 students on the Harvard Student Health Plan.
According to the director of pharmacy services at UHS, Benedict J. DiRusso, before last year, the generous discounts on contraceptives enabled UHS to offer these medications at a lower price. Once federal law abolished such subsidies, the formerly discounted drugs increased to a higher price.
When UHS’ stock of contraceptives ran dry, University doctors switched students from brand-name contraceptives to their generic equivalents. For birth control pills such as Ortho Tri-Cyclen Lo, which have no generic counterpart, students were required to pay the higher premiums.
Students in this category were in the minority, according to DiRusso. Most students were already on generic birth control before the federal law came into effect, he added.
For the future, Harvard students need not worry about any change in the status quo, said Director of UHS David S. Rosenthal. “UHS will continue to insulate the students from the cost increase of birth control pills, a policy which is made possible because of our prescription drug benefits.”