Many Lithuanians complain about food prices. How would you react if a minister announced “Eureka! I know how to make food cheaper! From now on buy only the cheapest bread and food prices will fall!” My guess is that some of you would be concerned with the minister’s mental health while others would be annoyed by such an advice. The minister, though, would be sacked, and fast.
All jokes aside, this is very similar to what the government is proposing for the prices of medication. Representatives of the Ministry of Health constantly emphasise that people’s choice not to purchase the cheapest drugs is the main reason behind high prices of pharmaceuticals.
Taxpayers are being ripped-off
Take any product – bread, pants or automobiles – only a minority of consumers choose to buy the cheapest one available. Naturally, when it comes to health, most of us have no wish to medicate ourselves with the cheapest product. But this is precisely what the government is forcing us to do. Why?
The government uses the argument of public finance and claims that since the government pays for the drugs (through reimbursement), it also has the right to decide which drugs we should use. Yet this argument has faulty logic and frightening consequences.
Remember the promises given when we are forced to pay for compulsory public health insurance? The government promises to treat us if we get ill. The fact that it’s going to be done with the cheapest drugs is found nowhere, not even in the small print. Last time I checked, taking money, promising one thing but delivering another was called “fraud”.
Therefore, if a contract were signed with each purchaser of compulsory public health insurance stipulating that for his contributions he will get only the cheapest drugs then there would be some semblance of honesty.
In contrast, by taking 1000 Euros per year ( that’s how much you pay for health insurance if you make 700 Euro per month), and giving the cheapest drugs is a rip-off.
Times are near when politician will start commanding senior citizens and the unemployed to buy only the cheapest food (or maybe even from which shops). The same “logic” applies: the government pays for your pensions thus the government can regulate what you buy.
Of course, this “logic” is flawed. And it’s not the government that pays pensions, but the taxpayers (by the way, if you want to annoy a politician, remind him that taxpayers, not the government pay for everything).
Show of farce (sic)
There are ways to reduce drug prices slightly. But the government does not seek results; rather, it seeks to put on a show. The government even hired actors and prepared social ads with the tag line “Be smart, don’t overpay for drugs”. One can only wonder how many prescription pills for the poor could have been bought for the money spent on this ad campaign.
But the theatrics don’t end there. The government has been pitching another regulation for years (albeit unsuccessfully). Elected representatives would produce forged prescriptions, come to a pharmacy and masquerade as customers. If the pharmacist fails the test of proper pharmaceutical service, e.g. does not offer the cheapest drug, then the drug store would be fined. Given that there is a whole list of government set criteria of what constitutes “proper pharmaceutical services” there will be ample chances to issue fines.
Another initiative seeks to ban advertising of pharmaceutical products. According to the government, advertising makes people buy too many drugs or too expensive ones. Therefore, no more advertising, no more problem.
But a large part of what we call “advertising of pharmaceuticals” is actually advertisements of pharmacies. In other words, large portion of ads are about where to buy, rather than what to buy (and pharmacies usually advertise discounts on specific drugs). Thus a ban on advertising means that you would need to take a trip to several pharmacies to compare prices. And a large part of price-sensitive people are poor, of old and age and limited mobility, and without cars.
We could make a sad joke that the ministry has prepared a secret program to promote physical activity among seniors called “walk to at least three pharmacies for your daily medicine”.
Maybe the ministry thinks that seniors will go to internet to compare prices? Even if they did, I suspect that under current laws on advertising, even comparison of prices would be called “advertising” and banned.
And now, seriously
There are some measures that could reduce drug prices. First, we should implement a system that would allow cheaper drugs from any other EU member country to be easily and legally brought to and sold in Lithuania (the so-called “parallel import”). Supply of cheaper drugs should make the prices fall.
Second, the list of pharmaceuticals reimbursed by health insurance funds should include all the drugs that are cheaper, and not only those that are twice as cheap. Currently, a generic (cheaper) drug has to be at least twice as cheap as a patented (more expensive) drug to be included in the list. Of course, prices falling by a half would be great, but a decrease by 25 percent is also good enough.
Thirdly, the silly rule that only one pharmacy can be registered at one physical address should be removed. Ever been surprised why massive shopping malls only have one pharmacy? Did you suspect foul-play from the shopping centre managers? No, it’s the law.
At least there is some progress. After demands from the Competition Council and other institutions, the rule that a pharmacy had to be at least sixty square meters in size is being cancelled. But due to this law many pharmacies had to re-do their shops or spend money on the purchase of new premises. Some even had to close down. Did this make prices higher or lower? These changes are not a cure-all, but this will reduce the prices somewhat in a sustainable manner. Of course, they lack theatricality, but people need cheaper drugs, not a government PR campaign.
