The problem with government regulation

A recent study, done by the Fraser Institute, shows that government regulation has not made medicine cheaper in Canada than the United States. The National Post reported on the findings here:

"Our conclusion is that government intervention in prescription drug markets does not produce overall cost savings for consumers compared to free-market-based approaches in the United States," said Mark Rovere, associate director of health policy research with the Vancouver-based, right-wing think-tank.

"The main reason for this is because the potential savings from low-cost generic alternatives could not be had in Canada because they are incredibly inflated because of government policies."

Personally I’m not surprised that government regulation has not had the intended effect, most government regulation doesn’t accomplish what civil servants and politicians hope it would accomplish. The problem with any government regulation is aptly demonstrated later in the same article:

Noting the focus on drug price is "significantly misplaced," the Canadian Pharmacists Association is instead pushing for more investment in pharmacy services to ensure governments and individuals are getting value for their money.

So the association of pharmacists wants the government to spend more money on...pharmacists.

And there lies the problem. Governments are too vulnerable to interest groups such, as the Canadian Pharmacists Association. Any regulation that is ultimately created is more likely to benefit such interest groups than the public as a whole. It may not be a bad thing for the public but it certainly would not be optimal.

I don’t really blame policy makers. I am not one of those that think politicians and bureaucrats are some sort of evil cabal. They are simply lessoning to one particular group of experts, never mind that the same experts have an obvious stake in the outcome. It is simply the way that all governments work.

It is inevitable.