Onglyza was approved by the FDA on Friday to compete with Januvia, the DPP-4 diabetes drug that has enjoyed a monopoly in its class since 2006. Januvia’s maker, Merck, sold $1.4 billion of the drug worldwide in 2008 alone.

All indications are that Onglyza is virtually identical in substance and effectiveness to Januvia — so you would think this might lead to lower prices for these drugs, wouldn’t you?

That’s what competition is all about, right?

Nope.

According to Reuters, AstraZeneca and Bristol-Myers Squibb, the makers of Onglyza, have decided to price the drug at a U.S. wholesale price of $5.72 per pill for common dosages.

That’s identical to Merck’s price for Januvia.

What a coincidence!

This is a great example of what’s wrong with our healthcare system. These drugmakers all know that the market is a mess — with copays, insurance companies, pharmacy benefit managers, and pharmacies themselves all standing between you and price transparency. They know that it’s difficult for consumers to fight back and demand price-based competition.

And so they have their little “gentlemen’s agreements” to not get into price wars. So everybody gets to pay the monopoly price.

This means that in the onslaught of Onglyza advertising you can expect to see on your television beginning any day now, you won’t hear a word about price.

In fact, when’s the last time you saw a pharmaceutical commercial where the drugmaker advertised that its product was cheaper than the competition? If you said “never,” you’re probably right.

Fortunately, as of today, you can find Januvia for less than $2 per pill in the Freebee Foreign Pharmacy database. Onglyza is not yet available from our member pharmacies, but we hope to add it shortly.

Dr. Richard A. Friedman, a professor of psychiatry at Weill Cornell Medical College, has penned an op-ed piece in the New York Times in which he calls out his profession for prescribing expensive brand medications over older, but equally effective and far less costly alternatives.

Writes Friedman:

Recently, one of my residents told me about a patient with bipolar disorder whose psychiatrist had prescribed an exotic cocktail of drugs — a sedative, a new mood stabilizer and the latest antipsychotic medication.

I was puzzled — not by her case, which the resident described as textbook manic depression, but by what was left out. This patient, it seems, was never offered lithium, the single most effective treatment for bipolar disorder…

Never mind that lithium has proved its safety and efficacy over decades of use; it’s passé — eclipsed by all the new and sexy blockbuster drugs … Lithium is cheap and unpatented, so drug companies have little interest in it. Instead, they have made a new generation of mood stabilizers, some more tolerable than lithium, but none more effective.

So, why would doctors prescribe pricier — and less proven — brand medications? Friedman says they have been seduced, and even pressured, by drug company marketing:

Doctors and patients alike are inundated by drug company marketing. The companies like to say they are interested in educating the public and physicians about various illnesses, though I have yet to meet a single patient who learned anything informative about any disease from an advertisement.

Instead, I have seen scores of patients in my office, eager to get the latest antidepressant or mood stabilizer that promised them tranquility on their TV screens. No wonder: drug company spending on consumer advertising skyrocketed 330 percent from 1996 to 2005…

If you want to save on your prescription drug bill, be sure to ask your doctor if there is a less-expensive medication to treat your condition. In most cases, your physician doesn’t even factor a drug’s cost into his or her decisions — unless you specifically bring it up.