RX For Nosebleed Prices

Of all the wonder drugs in today's medical arsenal, the heartburn treatment Prilosec has long been the most successful. The stomach soother reaped an astonishing $6.2 billion in sales last year to make it the best-selling prescription drug ever--a title Prilosec stands to lose when its patent expires in October. But if the drug's maker, British firm AstraZeneca, behaves like many of its counterparts in the industry, it won't easily relinquish its monopoly. Indeed, sources confirmed to TIME that the Federal Trade Commission has quietly launched an investigation into whether AstraZeneca illegally blocked generic competition to protect its Prilosec franchise. A company spokesperson said the firm would cooperate with the probe.

The inquiry reflects a widening drive by Washington to restrain the relentless rise of prescription prices, which remain the fastest-growing component of America's $1.3 trillion health-care bill. The action is on two fronts. The FTC, for its part, is going after brand-name drug companies that seek to block cheaper, copycat generic drugs from the marketplace. At the same time, a bipartisan duo of congressional lawmakers is pushing legislation designed to restrict those anticompetitive tactics and speed up government approval of generic medicines.

The crackdown is timely, given that 200 patents are set to expire over the next five years on branded drugs with annual sales totaling $30 billion. That will give the makers of copycat products a rare opportunity to steal market share, since generics on average debut at 75% of the cost of their name-brand rivals. The price difference could be crucial to many Americans since the average cost to fill a prescription jumped 10.5% in 2000--to $45.27--according to the National Institute for Health Care Management. That increase was more than three times as great as the overall rate of inflation. The group said spending on U.S. prescriptions rose 18.8%, to a record $131.9 billion last year, as consumers purchased ever more and ever costlier remedies.

With its eye on cost, the Food and Drug Administration last week took testimony on whether to require makers of the blockbuster allergy drugs Claritin, Allegra and Zyrtec to sell the products over the counter, a move that would slash their prices. An FDA advisory panel ruled that the drugs were safe enough to be sold without prescription. While the FDA is not required to follow the panel's advice, it has usually done so. A switch to over-the-counter sales would benefit uninsured buyers--as well as insurers, such as the California managed-care giant WellPoint Health Networks, which sought the reform. But insured consumers would be hurt, since the cost of over-the-counter drugs is not reimbursable.