Monday, March 16, 2015

Free drugs for all

The incremental socialists are at it again.  Their target this time? A national pharmacare system. As Eric Hoskins, health minister in the Wynne government asked why should the poor have to choose between food and medicine? Don't we all deserve access to the same standard of care? Isn't health care a human right and aren't prescription drugs a key component of fighting illness and disease? And to hear proponents of this plan such as Dr. Danielle Martin tell it, the whole thing can be done without a net cost to the state.  Golly!

The cost of prescription drugs is an important issue. But is the high cost of these products a result of a limited supply brought upon by production costs or is the supply kept artificially low because of the patent system? And even if we accept the rational and likely premise that some people can't afford to purchase medicine which is necessary to their health, is the answer really to impose a bulky program on the totality of the industry or couldn't we handle the problem with targeted, voluntary relief? After all many people are already covered under private drug plans supplied by their employer.

For those of us who are hesitant to expand the already overwhelming scope of the state some lingering questions remain. Will this new program be funded through the imposition of higher taxes, and if so what will be the consequences to economy which is already performing tepidly? Or will the available pool of capital be tapped even further when politicians decide that it will be more popular to simply borrow the necessary funds? Either course of action will mean our nation is less prosperous as a result. And what happens to this program when politicians recognize that raising taxes is politically unfeasible? They will then turn back to the solution which they have imposed on our health care system, namely rationing. We will be taxed in order to pay for the drugs and then denied them in the name of expediency, just as now so many people languish waiting for hip surgeries or for an opportunity to see a specialist.

There are also certain moral hazards attached to this program. Already prescription drug abuse, specifically that of opiate based pain killers such as oxycotin, is an epidemic in our society. What will happen once these drugs are not only widely available but also free to the end user? We live in the high time preference society. Everyone is looking for a quick fix instead of hard work. We already rely too much on drugs and treatment instead of focusing of prevention. While there is certainly a role for drugs in the treatment of disease isn't it far better to live a healthy lifestyle and avoid the disease in the first place? A lot of drugs have very dangerous side effects. Since all demand curves are falling the lower a price the more of a good will be purchased. By eliminating the cost to the end user we are going to encourage more people to take possibly unnecessary drugs, which in turn will lead to less favourable health outcomes.

There are problems with the present market in pharmaceuticals, absolutely. There is an incentive issue with the regulatory process. When a drug is approved and it has disastrous side effects and ends up killing people then there is a backlash and the bureaucrat involved in the approval may lose their job. On the other hand when a drug is not approved, or it is delayed, and the people who could have been saved for it are not, nothing happens. So an overly cautious mentality is fostered at the expense of the general public. The best person to make a particular risk / reward analysis about the utility of a potentially dangerous drug is the person in question, in consultation with their doctor. Who is the state to deny a potentially life saving drug from a terminal patient simply because it is untested and risky? How is some far removed bureaucrat in a better position to make this decision for thousands or millions of people they will never meet than these people themselves? Instead of a byzantine process of regulatory approval we should scrap the entire process. Those who are critical of the safety or efficacy of a new drug need not take it; but those who are desperate for a cure for their disease should not be kept from medicine which may save their life.

Price controls have also predictably led to shortages of drugs and, counter intuitively, to higher prices given the way that the price controls work (the price of related drugs are tied together, making it much less profitable for a company to lower it's prices than it would otherwise be). Eliminating these price controls is the obvious and simple solution. Over two thousand years of failed experiments in price controls should surely be enough to convince planners of their ineffectiveness.  It's time to abolish the Patented Medicines Prices Review Board.

Reforms are needed in the pharmaceutical industry, but the solution is not a government takeover; it is de-regulation and the removal of unnecessary nanny state controls imposed by well meaning but short sighted do-gooders.


  1. Why would this need to be discussed by a true Libertarian. Government interferance in any form other that nescessity is against the principles of the group or it is not true Libertarianism.

  2. It is important to apply the libertarian analysis to the issues of our day and the cries for universal pharmacare are growing louder by the day.

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