Rationing drugs is not the way to cut costs

I know an easy way to control growing health care costs: just force patients to wait a full year instead of just five months before they get surgery.

Sound like the wrong prescription? Indeed it is. In areas where governments are heavily involved, such as health care, cutting spending may simply mean further rationing of services that people need. I may think government is too big, but there are more intelligent ways to cut costs.

Unfortunately, that's what the federal and provincial governments have been doing to control spending on prescription drugs. A number of policies have been put in place, including price controls and formulas determining a limited number of drugs that can be reimbursed to force suppliers to lower their prices.

The results have been predictable: fewer drugs are available.

As of December 2012, barely 21% of the new drugs approved by Health Canada from 2004 to 2011 could be found on the lists of reimbursable products. This is having harmful effects on patients who find themselves deprived of the drugs they need or who have to wait longer for them.

Policies that artificially reduce prices also end up making the production of certain drugs simply unprofitable and forcing some producers altogether out of the market.

Remember a year ago when Canada experienced a shortage of drugs that forced the postponement of surgeries across the country? Manufacturer Sandoz was blamed, but only government policies explain why it became the sole supplier of a multitude of crucial products in the first place.

There have been several cases of generic drug shortages in recent years that coincides with the provincial governments' continued lowering of price caps. In Quebec, the number of notices of drug supply disruptions has increased considerably, from 33 in 2006 to 207 in 2010.

To solve these problems, some groups are proposing the adoption of a pan-Canadian, government-run drug insurance plan that would cover prescription drug costs for the entire population. This would replace the mixed public-private system managed by the provinces that we have.

Such a system, they maintain, would increase access to drugs while better controlling costs. How? By expanding the same cost control practices at the national level and letting Ottawa bureaucrats decide for us all.

Centralized one-size-fits-all government programs never provide better services. Not only that, they also usually cost more when everything is factored in. Why not give people more choice and more flexibility instead?

Michel Kelly-Gagnon est président et directeur général de l'Institut économique de Montréal. Il signe ce texte à titre personnel.
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