This is not true of in-app purchases. They should now require a password for every purchase.
Restrictions turn on/off your ability to access certain features and apps on the iPad. The only password is a four digit code that you need to enable and disable the restriction.
Go to the Settings app, then General >> Restrictions. In order to enable restrictions you'll have to enter a four digit code, twice. Don't forget the code. If you do the only way to undo the restrictions is to restore the iPad.
To stop the purchase of music, movies, etc turn off iTunes. To stop the purchase of apps, turn off Installing Apps, and you might as well turn off Deleting apps as well, to prevent accidents. You can also turn off In-App Purchases just to be thorough.
When you want to buy, install, or delete stuff you will have to go back into the settings and re-enable all this stuff. It is a bit of a pain to do things this way, but it is what we've got. As a bonus it tends to help stop impulse buys, since you have a few step to go through each time you decide you want something new.
Don't forget the passcode.