News from the New Party

Tuesday, February 20, 2007

NHS price fixing less efficient than free market shock!

There is plenty of outrage in the media today at the less than astounding news that pharmaceutical companies are charging the National Health Service too much for drugs. While we would agree that this is a scandalous state of affairs, we would also argue that it is inherent in the nature of monolithic public services for this kind of anomaly to occur. The market provides a mechanism for optimising costs. Drugs companies will naturally seek to charge what they can get away with, and when they have a large, captive customer, they can get away with a lot more than they will be able to with a number of customers all seeking the best deal. The system is bad for drugs companies (because they don't have to work hard enough in domestic markets, they probably aren't working hard enough in foreign markets), bad for the NHS and worst of all bad for patients. Money wasted on an excessive drugs bill is money not spent on other treatments.

The Office of Fair Trading plan to alter the Pharmaceutical Price Regulation Scheme to make drugs companies prove that they give value for money to the NHS probably won't help either. The way for companies to prove they give value for money is in competition with each other. Price fixing in any form makes for lazy, inefficient business of any kind. In other words, it is well suited to the twentieth century style and structure of monolithic bloated public service bureaucracies, and very poorly suited to the needs of a twenty-first century society and economy. Britain deserves better than this.

The whole National Health Service needs to move forward to a model whereby providers of health care, as well as providers of drug treatments, operate in a free market to increase efficiency of the service and to reduce costs. The role of government in the Health Service should be minimised, and should extend primarily to ensuring that necessary health care is paid for so that our citizens are not required to pay for health care at the point of need (which is after all, what the NHS is supposed to achieve). This can much better be done by providing people with the means for health insurance (which can also be efficiently delivered in a competitive market setting). In the end, this would save all of us money as we pay for an efficient, effective and secure health care system through personal insurance schemes paid for through Personal Equity Trusts as recommended by the New Party, or by a similar mechanism. It would certainly be better than paying a premium through general taxation for a bloated, inefficient and monopolistic NHS.

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NHS price fixing less efficient than free market shock!