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A tale of two drugs: why we all pay (more) for socialised care

I came across a really interesting article on the US healthcare system on the Mises Institute website yesterday, which puts forward the argument that rather than help, Government intervention in the healthcare market only makes things worse – most obviously by raising prices and costs way higher than they otherwise would be. Quite frankly, this article is completely relevant to the UK’s NHS as well.

Below is a key section of the article where the author uses a simple example to demonstrate the inherent flaw in socialised systems:

The following is an example of a real and very popular drug that I use on a routine basis that I will call drug X. Drug X works by inhibiting blood clot formation (when a blood clot forms in a vessel in the heart, one can have a heart attack). Drug X and drug Y work together by acting on different substrates of the clot-formation process to ultimately effect the same outcome — stopping clots from forming. Drug X costs on average $141.82 per month. Drug Y costs a couple of dollars per month over the counter at your local drug store. What does the data tell us about the two?

Multiple studies have been performed to answer the question: Does drug X improve cardiovascular outcomes compared to drug Y alone after a patient has had a major cardiovascular event or a stroke? The answer, unequivocally, is yes. By how much? The answer is a few percentage points, give or take.[2] Does it eliminate the risk all together? The answer, unequivocally, is no. It should also be noted that drug X in addition to drug Y confers a minor increase in the risk of having a major bleeding event. So the question is: How many people, in the appropriate clinical setting, knowing this information, would buy drug X for $140 per month? Probably not nearly as many who take it now for nothing or for a small copay. Leaving aside the issue of brand names and patents, under conditions of market competition, do you think the company who makes drug X would lower the price to entice more buyers? If they did not lower the price, or simply could not lower the price due to production costs, I would venture to guess that drug X would not be marketable outside of a small niche of patients.

Now ask yourself, is the doctor who recommends drug X the bad guy? Of course not: drug X does provide a benefit beyond drug Y itself, and furthermore, if he didn’t offer it and the patient had a heart attack (which could happen despite being on drug X) the doctor could be at risk of losing his medical license. After all, drug X is part of the standard of care. Is the patient the bad guy? Of course not: if you were offered the chance to take a drug that had a defined benefit and wouldn’t cost you that much, you’d be silly to reject it. Is the pharmaceutical company the bad guy? No, they have a responsibility to their shareholders to make a profit, so they should sell their product at the highest price possible.

So who’s to blame? The answer: a system that has been developed by government intervention to interfere with consumer sovereignty and make every individual pay for every other individual’s medical expenses so that the individual consuming the care does not bear the full price at the point of utilization.

For me, this is pretty much self-evident. Amongst all of the wailing and gnashing of teeth that we have all been subjected to recently on the subject of reform – from the unions, the myriad vested interests, the politicians (from all parties) and our unbiased (hah!) media – where is the voice of the actual, put-upon consumer?

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