David R. Henderson  

Progress on Health Care

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Progress on health care? Really? While Obama is President? The Obama who said you can keep your doctor and your insurance and oh, by the way, your insurance will cost less? That Obama?

Yes, really. But it has little or nothing to do with Obama.

In February 2012, in a post titled "How to Cut the Cost of Contraceptives by Regulating Less," I wrote:

Nevertheless, there is a way that the federal government now cuts access to contraceptives in a way that substantially raises the cost. Were the government to get rid of the regulation that does this, women's access to contraceptives would rise and the cost would fall.

What is the regulation? It's the one that requires contraceptive pills to be prescription drugs. If, instead, drug companies were allowed to sell contraceptives over the counter, access would rise and cost would fall.

A month later, Virginia Postrel laid out a more-complete case for the measure I proposed.

And now it's happening.

Writes Megan McArdle:

Oregon is making hormonal birth control legally available without a doctor's prescription, and California is set to follow suit. This is great policy, and the rest of the country should follow this example.

I guess you could call this "no-baby steps."

Comments and Sharing

COMMENTS (9 to date)
Mark V Anderson writes:

So does this mean that prescription drugs are inherently pricier than over-the-counter? Is this because prescription drugs are subject to less competition because they are often paid by third party insurance? Or maybe because a doctor's prescription specifies the brand? Have there been studies that show that prescriptions cost more?

I have long been against prescription drugs as being an example of nanny-statism, and also because more costly as it takes a doctor's time. It would be nice to have one more arrow to help shoot this down.

@Mark V Anderson
I understand David's assertion (that cost of access to contraceptive pills will fall if those pills do not require a doctor's prescription) to stand upon the cost of seeing a doctor.

John Hayes writes:

@Mark V Anderson,

The prescribing process does increase the cost in money and time, even though nurse practitioners can probably write this prescription. A much bigger increase in cost is caused by pharmacists who aside from dispensing fees, contribute highly to price opacity.

Different pharmacies charge wildly different amounts for the same drugs. This is made worse when you consider the overhead of transferring a prescription.

James writes:

@Mark V Anderson

It's all of the above. Getting a prescription drug means higher prices due to all of the people involved in the process. When people go to a doctor, they generally schedule an appointment, wait, take time from their job, travel to the doctor's office, have a nurse take their temperature and blood pressure, see the doctor, and get the Rx. Then they have to travel to a pharmacy, drop off the prescription, wait, pick it up and pay for it. Then there is the overhead of insurance which is how most people pay for doctor visits and prescription drugs.

Getting an OTC drug requires the cost of transportation to the drugstore and the cost of the drug.

I wonder if any economist has estimated the total added cost of requiring a prescription for a drug.

Charley Hooper writes:

There's another huge reason that OTC drugs are cheaper: patients typically pay 100% of the cost. With prescription drugs, a third-party payer is often paying the bulk of the cost, leaving the patient with just a copayment. Many health plans don't cover OTC products, meaning that these drugs face the full price sensitivity of cash-paying customers.

I used to work at Syntex, with had prescription drugs Naprosyn and Anaprox. These drugs became the OTC drug, Aleve. I don't have the numbers in front of me, but I'm sure that Aleve is far less expensive than Naprosyn or Anaprox.

Tom West writes:

We'll see if this move to OTC survives the first time there's publicity around a young person doing something stupid and tragic with them.

I'd say making it OTC is a net improvement, possibly a significant improvement, but I'm not convinced that our society is willing to increase risk to any degree, no matter how big the improvement.

Our motto seems to be "Not using your brain should not put you at risk."

ThomasH writes:

There were a lot of missed opportunities in the ACA to make healthcare more efficient and not just expand access to health insurance and, ever so marginally, nudge us away from employer "provided" insurance. But healthcare reform is a long road.

RPLong writes:

I would like to see this happen for insulin and asthma medication.

Daublin writes:

"No-baby steps" makes my day. Thanks for that!

I just spent most of the weekend amongst people saying they are sure health care has gotten better but they can't point to any specific reason. They just say "Obama". That's both the explanation of *what* is better now, and their explanation of why I should believe it is better.

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