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For defenders of government-run health care, the
existence of provincial drug benefit plans is actually a blot on
Canadian health care, in that they are not part of single-payer,
first-dollar coverage, medicare (National Forum on Health,
1997:22). When the state took over health care, it left
prescription drugs out of its grasp. As of 2001, governments in
Canada paid for an estimated 49 percent of prescription costs,
private insurers 30 percent, and individuals 21 percent (CIHI,
2002a:44).
It is not surprising that politicians avoided bringing
prescription drugs into medicare. According to the Canadian
government's interpretation of the Canadian Health Act, patients
or private insurers are not supposed to pay any money for health
services insured by the government, under any circumstances. For
most services, governments can control the supply, cutting off
access while still pretending to provide universal health care.
For example, the supply of doctors can be kept low by restricting
admissions to medical school, preventing physicians with foreign
qualifications from practicing, or simply making the environment
so unrewarding for them that they leave.
"Reference pricing" is an activity in which everyone engages
during commercial transactions: compare two competing products;
if the more expensive one is not worth the premium, then buy the
cheaper one. Who could object? When government agents make the
decision on behalf of patients, however, the issue is not so
clear.
There are often a number of competing prescription drugs that
address a given medical condition. Reference pricing occurs when
a government takes away its citizens' freedom to buy medicines of
their choice for that condition, by taxing them and allocating
the proceeds to drugs selected by a government appointed
committee.
This is one method of sharing the cost of a prescription drug
between patients and the taxpayer. Another is for the government
to give a partial subsidy to patients, but not to become involved
the details of how the subsidy is spent.
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