March 2001
Finding the Best View from the Titanic
by John R. Graham
A group of Canada’s leading health policy analysts has issued an anguished cry for the continuation of the status quo. The nation must commit to Revitalize Medicare, the title of a paper recently released by the newly-minted Tommy Douglas Research Institute (Rachlis et al., 2001). Medicare is not in crisis, it just needs a bit of tweaking here and there, say four of Canada’s leading health policy analysts, including the University of British Columbia’s Professor Morris Barer, Scientific Director of the Institute for Health Services and Policy Research, one of the federal government’s newly-created Canadian Institutes for Health Research.
Waiting lists, for example, are not things that should be measured. They are to be poked and prodded, manipulated and massaged into good shape by the defenders of government monopoly health care. The authors are not impressed with The Fraser Institute’s Waiting Your Turn (Zelder with Wilson, 2000), which they note has been widely covered by the popular media in the past. Unfortunately for them, it will continue to be well covered, because it is Canada’s only nation-wide survey of waiting times for a broad spectrum of surgical procedures. It deals only in facts, as reported by physicians. The authors’ alternative, the Western Canada Waiting List Project, on the other hand, is "working to develop priority-setting tools to better manage waiting lists," whatever that means. The offspring of a workshop held in 1998, the taxpayer-funded Western Canada Waiting List Project has yet to produce even one single waiting list!
Canadians should be extremely concerned with the report’s prejudice against prescription drugs. Another author, Professor Robert Evans of the University of British Columbia, is also the author of an inflammatory paper, "Uses and Abuses of Research and the Research Process," part of a collection ominously titled Tales from the Other Drug Wars, which was released before Christmas (Barer et al, 2000). In it, he describes pharmaceutical manufacturers as "white-collar mafia," whose "thuggery" consists of hiring trigger-happy lawyers to suppress any information contrary to the corporations’ interests. Needless to say, if this accusation were true, he would not have dared to write such prose, nor would the university have allowed it to be published.
According to the authors, brand-name drug manufacturers are largely to blame for problems with the Canadian health care system, simply because they are profitable global corporations. On the one hand, the authors seem to regret that doctors prescribe newer, more expensive drugs instead of older and cheaper ones for high blood pressure. On the other hand, they note that decreased use of prescription drugs in the elderly and poor in Quebec has led to increased emergency room use. The authors appear to believe that prescription drugs are generally not as good as advertised, but that those which successfully compete to get approved for a national registry (or formulary, in trade lingo) be given away free. However, giving something away does not generally encourage judicious use of it. Furthermore, believing that one drug is acceptable simply because it’s cheap and another is not because it’s expensive, ignores the complexity of individuals’ ailments and further erodes the doctor-patient relationship.
As the authors note: "neither physicians nor patients know the costs of the different medications….. implying limited opportunity for traditional competitive forces to affect the market." This flawed situation is completely the result of government interference. Provincial drug benefit plans, which subsidize purchases by seniors and the poor, are the largest financiers of drug consumption. Private health plans, offered by companies to employees, are popular because the benefits are not taxable. The market is structured around these third-party payers, while patients who pay for their own drugs are an afterthought. Restrained by laws restricting advertising to consumers, drug companies in Canada commit inordinate resources to lobbying provincial drug plans for access to formularies and doctors to write one brand-name on a prescription rather than another. The consumer is almost ignored. Tax-free, compounding savings accounts, like RSPs but dedicated to prescription drug purchases, would bring the patient back into the decision- making process (Graham, 2000).
However, this cannot be done in isolation. As long as other medical services are "free" there will always be a bias against adequate prescription drug use, and in favour of other procedures. The status quo, where even those covered by provincial drug plans pay some pharmaceutical costs themselves, does not lead to over-use of prescription drugs, but under-consumption. Indeed, recent research indicates that the only area where increased government health spending reduces waiting lists is prescription drugs (Zelder, 2000). On balance, they are part of the solution to our health care crisis, not the problem.
The Tommy Douglas Research Institute has identified the symptoms of our health care system’s failure, but not the causes. Our goal should be to improve Canada’s health services through whatever reforms are necessary, not to preserve the current system for its own sake.
References
Barer, M.L., K.M. McGrail, K. Cardiff, L. Wood, and C.J. Green (eds.) (2000). Tales from the Other Drug Wars. Vancouver: The Centre for Health Services and Policy Research at the University of British Columbia.
Graham, John R. (2000). "Financing Pharmaceuticals in Canada." Fraser Forum (December): 24-25.
Rachlis, M., R.G. Evans, P. Lewis, and M.L. Barer (2001). Revitalizing Medicare: Shared Problems, Public Solutions. Vancouver: Tommy Douglas Research Institute.
Zelder, M. (2000). "Spend More, Wait Less? The Myth of Underfunded Medicare in Canada" Fraser Forum (August): 3-49.
Zelder, M., with G. Wilson (2000). Waiting Your Turn: Hospital Waiting Lists in Canada (10th edition). Critical Issues Bulletin. Vancouver: The Fraser Institute.
John R. Graham (johng@fraserinstitute.ca) is Senior Analyst and Acting Director of the Pharmaceutical Policy Research Centre at the Fraser Institute. He has an MBA from the London Business School, University of London.
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