Obamacare

When Governments Choose To Pay For Medicine, They Also Choose What Medicine To Not Pay For

|

According to the Wall Street Journal, a number of European countries are planning to cut back on prescription drug spending in order to help patch their budgets. Predictably, that means that some of the latest, most expensive drugs won't be available to some folks:

Greece has enacted some of the steepest cuts, slashing what it will pay by about 25% and drawing the ire of some drug makers. Over the weekend, Denmark's Novo Nordisk A/S said it was refusing to lower the price on its most expensive forms of insulin, effectively making them unavailable to Greek patients.

Novo Nordisk said it would supply its older, cheaper forms of insulin at the reduced rate. "A 25 percent price cut does not allow us to run a sustainable business in Greece, and this is what we have told the government," Novo Nordisk said in a statement Wednesday. "We will ensure that there are still insulin products available, albeit not the newest versions."

Danish drug maker Leo Pharma A/S also said it would stop supplying some drugs to Greece. The company makes treatments for psoriasis, eczema and other ailments.

This comes just days after a report that Canada plans to make big cuts in its prescription drug spending, also in response to looming budget troubles and the rising cost of care. The point here isn't that these governments should be spending more on medicine. It's that when governments provide, pay for, and guarantee medical care, it's always exceedingly difficult to keep costs from rising out of control because neither patients nor doctors have any incentive to make prudent decisions about care.

It doesn't require that patients or providers be totally reckless, either; marginal calls about the value of additional testing and treatment are going to be different when those tests and treatments are publicly subsidized. But that results in ever-increasing demand, which results in budget troubles. Inevitably, those budget troubles lead to government bodies making choices about what care to not pay for. And because public health care systems tend to have built-in advantages that allow them to dominate their markets, those otherwise reasonable-sounding budgeting decisions become decisions about what treatments are and aren't available to citizens—which frequently means that citizens get stuck with lower-quality treatments.

NEXT: Reason.tv: The Rise of The Surveillance State - Q&A with "Watchers" author Shane Harris

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. This comes just days after a report that Canada plans to make big cuts in its prescription drug spending, also in response to looming budget troubles and the rising cost of care.

    And here I thought government was going to make it all right because they are not motivated by profit . . .

  2. Would it have been so hard to say “What Medicine Not to Pay For”?

    1. Yep, it’s good grammatical practice to never split one’s infinitives.

      1. *rimshot*

  3. This won’t happen in the US, because a politician said so.

  4. You blame the governments rather than the greedy companies that figure out a way to heal people and then want to CHARGE them for it?

    Typical.

    1. If you think you can discover the cure for cancer in your basement, by all means try! Labs are expensive, whether or not you like it. (And no, it doesn’t mean I agree with many of the innovation-stifling practices of Big Pharma)

      1. So you actually believe that if we don’t pay people to find cures that they’ll just stop finding cures and find another line of work that pays?

        You need a lesson in economics.

        Besides, I don’t need to find a cure for cancer, Eddie Van Halen has already found it. We just need to convince him to tell us how.

        http://www.knac.com/article.asp?ArticleID=4946

        Rock Stars, is there anything they can’t do?

    2. This is sarcasm.

  5. What an incentive for pharma companies to do R & D.

  6. Who could have foreseen this?

    1. UH, any sentient humanoid with access to a newspaper, history book, the web or, well, a brain?

    2. Ahem.

  7. You guys are too focused on how the people at the top are doing.

    It isn’t important how shitty the care is, it’s important that everyone has access to shitty care.

    1. Which Obamacare fails to do! It’s a twofer – worse, more expensive care AND millions left uncovered!! GO, BARRY!!

      1. And the bean counters should take note!

        When you see them talking about hidden savings, part of what they’re talking about is precisely this kind of rationing…

        The healthcare you used to get that won’t be paid for in the future under ObamaCare is part of what they’re talking about…

        Sometimes when people hear the word “rationing”, I think they imagine something like what we saw during World War II, and that seems ridiculous, but this is what rationing looks like…

        http://www.cato.org/pubs/regulation/regv24n2/morreim.pdf

        …we’re not talking about anything new here. I used to help make software that helped hospitals check for this stuff–it’s been around for decades.

        The policy making bodies are already in place for determining what is and what isn’t covered. It’s been there for decades. Really, one way to think about ObamaCare is that essentially expands Medicare and Medicaid to cover a lot more people…

        So you’d just expect to see more of the same problems associated with Medicare and Medicaid, just blown up on a bigger scale.

        …and Medical Necessity, among other things, is already a part of those problems.

        1. So will the Greeks get Wilford Brimley hawking diabeetus testing supplies, dubbed into Greek?

          1. Not, they get a Greek actor named Wilfordos Brimledopolous…

  8. the debate is over

  9. Let the “I told you so” dance begin.

    1. Is that the dance where I bend over and take it again and again and again? Because last I checked that’s still the only move I’ll be doing.

    2. I already covered this in rather profane and erudite detail, Aresen.

      1. Yes, and it was awesome. I forwarded it to many friends, all of whom agree it’s on the top ten best rants list.

        1. top ten rants of whining, bitching and greedy doctors.

  10. And because public health care systems tend to have built-in advantages that allow them to dominate their markets, those otherwise reasonable-sounding budgeting decisions become decisions about what treatments are and aren’t available to citizens?which frequently means that citizens get stuck with lower-quality treatments.

    Are Greeks allowed to purchase the drugs privately if the state doesn’t cover them? If so, this post is much ado about nothing.

    1. Sure, if they have any money left after the taxes that pay for their State Care.

    2. Sure Jersey, so long as the rich can still buy it who cares about the poor this was supposed to help get better medical care. Funny thing is the rich will never know how many cures they wont be able to afford because they were never invented. If the governments wont pay for new expensive cures no one will research them.

      1. If the governments wont pay for new expensive cures no one will research them.

        That’s a shame.

  11. Predictably, that means that some of the latest, most expensive drugs won’t be available to some folks

    Whereas in America, the most expensive drugs are available to everybody!

    1. The reason my medications cost three times as much here as they do in Mexico has to do with Medicare and Medicaid.

      …In Mexico, the free heathcare system is separated from the private one. So the hospitals and pharmacies don’t have to make up for all the money they lose giving essentially free care to people on the government program.

      You don’t just pay for your own medications here in the US–you have to make up for all the people who don’t pay because they’re on a government program too.

      …putting more people on the program just makes it worse. …and that’s what ultimately leads to exactly this kind of rationing…

      Again, who cares if nobody can get the best treatment so long as everybody gets substandard treatment?

      The answer is–I do.

    2. Starve the troll, please.

    3. They are. I don’t know about you, but I value my life enough to pay to to keep myself alive and I value freedom enough to do so without forcing my neighbor to pay for me to be alive. So what if drugs are expensive? Supply and demand doesn’t go away just because you wish it would.

      1. Supply and demand doesn’t go away just because you wish it would.

        /tantrum

        BUT I WAAAAAAAAAAAANT IT!

        /tantrum

  12. By the way, in commercial real estate, just like in every other business, they way I figure out if I can build something?

    I take the market price of the building I want to build, and I see how much money would be left over after the cost of building it–if there is any.

    There isn’t any reason to think the pharmaceutical companies aren’t the same way. They calculate how much they think they’re going to get for the products they develop, they subtract whatever the cost of developing them is, and if they don’t think there’s gonna be any money left over–they don’t bother with the research.

    Will there be no more research because of that? No, there’ll still be research. …but not as much as there would have been. You can make more widgets than the government will pay for, but ultimately, if a huge chunk of the healthcare market suddenly can’t pay for what you’re making, at some point you either have to stop making more of it or go broke.

    That’s the other off balance sheet savings in ObamaCare. 1) rationing like what we’re seeing here and 2) prevent people from spending on new research.

    Either reason is good enough to warrant opposition by consumers of healthcare. Anything that will serve to restrict consumer choice should be opposed by consumers. And that’s what ObamaCare does.

  13. Oh, this is already happening with ‘government health care’, right here in the US. Ask anyone covered by the military’s TRICARE system. Things that TRICARE will not cover (so far, I have only been researching via personal experience, and that of my wife) – anti-smoking medication (although they’ll spend a barrelful of money to tell you to quit, they won’t help); some, but not enough insulin for a dependant Type I diabetic to make it the entire month, and last but not least, any of the current ED meds – so, there you have it: The government does not care if your dick works.

    1. You lost me at ED. Nonsmoking soldiers seems like a worthwhile investment for them to make. And not-having your guys slipping into diabetic comas also might be worth it; but should The Service even be accepting people with diabetes?

      But boner pills? C’mon, what possible military justification is there for supplying your soldiers with erections?

      1. The military won’t ENLIST someone with diabetes, but if you develop it while in the service they will RETAIN you. I’m curious though, in Wind Rider’s situation, is it the servicemember or the spouse who has diabetes? That might have some bearing on how much meds they’re providing and for how much.
        And, yeah, the ED meds you’re probably going to be SOL on.

      2. I guess you missed the part where Wind Rider said “dependant.” I.E. Kid or spouse.

  14. Back when Peter Jennings was still alive and using World News Tonight as a propaganda tool to push for government control over the medical system, he ran two reports (obviously not at the same time):

    One decried how evil the insurance companies were for refusing coverage of the latest drugs and using generic substitute rough equivalents instead.

    The other decried how evil the pharmaceutical companies were for constantly pushing the latest drugs on doctors, thereby making obscene profits and driving up the price of prescriptions.

    1. So, in a nutshell: Good Riddance?

    2. Good for him! Way to expose the multifarious wickedness of the capitalist system. He will be missed.

    3. All information is highly compartmentalized for your garden-variety port-sider.

      1. Harrr!

  15. Hey let’s completely ignore that 25% of all Federal monies go to Medicare/Medicaid – according to the latest figures released by the Obama Admin. That this new program raises the cost of healthcare for everyone, will create more uninsured & will further burden every state w/ additional costs. You taxes go up locally, federally & your healtcare quality goes down while you spend more.

    Great solution

  16. Rationing is necessary to maintain universal access to healthcare.

    Next story.

  17. I feel much better about rationing, if the insurance company is doing it. I have made a conscious decision (or maybe a short-sighted one) to pay for expensive care or bet that I will live to 95 in great health and then just keel over. It is a matter of personal responsibility. But when the government rations the same level of care, I have no confidence in the decision being anything but political and subject to corruption and ineptitude. And taking a lesson from how well most government organizations are run, and beholden to which special interests), I have no doubt that employees of a hugely bloated federal government will have the very best care and the rest of us – not so much.

  18. The governments involved could solve a big part of this problem by doing the same thing private insurance companies do today. Reimburse for the less expensive treatment or at a less than optimum rate, but allow the patient and doctor to decide to still get the treatment they want if the patient pays out of pocket for the difference. This way, those who are willing to pay a little extra, would still have the right to get what they want. But of course no socialist government willing to nationalize health care would go with that sensible solution, because it would provide better care to those willing to pay for it. They would rather have no treatment for anybody, rather than to allow treatment to those willing to pay extra.

  19. The superiority of  Replica Rolex Watches are not only for the best price,but also for the high quality ofreplica watches.We offer cheap replica rolex watches,replica watch,fake watches online for sale.

  20. The governments involved could solve a big part of this problem by doing the same thing private insurance companies do today.

Please to post comments

Comments are closed.