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InsiderOnline Blog: March 2012

Forcing Prices Down Comes with Costs

Using government buying power to force down health care prices (which was the point of the “public option” in the original version of ObamaCare) appears to have put patients at risk in Canada.

John Haggie, head of the Canadian Medical Association, warned the House of Commons on Thursday that a national drug shortage was forcing cancellations of surgeries, “leading, at best, to delays and, at worst, to a real deterioration in the health of those patients forced to wait.”

The problem began after the U.S. Food and Drug Administration warned Sandoz Canada about manufacturing deficiencies at its Boucherville plant in February. Sandoz supplies about 90 percent of the injectable drugs used in Canada’s hospitals, and also produces for the U.S. market. The company agreed to make upgrades to its plant, which required cutting back on production.

Marni Soupcoff, writing for the National Post (March 24), says that while the U.S. FDA may be nitpicky about technical infractions at the expense of patient welfare, the underlying problem is Canada’s system of bulk buying:

[I]n the search for cost containment and less expensive drugs, the provinces have been moving toward a bulk purchasing model. Either on their own, or by joining a large group purchasing organization, they enter into agreements to buy drugs in large quantities to get a lower price per item. It reduces the governments’ overall pharmaceutical costs, but tends to result in far fewer suppliers.

[…] Hence, when Sandoz slowed production to focus on revamping its plant, there were no other big pharmaceutical companies set to jump in and start producing the scarce injectables – or (even less likely) with the needed products already sitting around, gathering dust on their shelves.

Posted on 03/29/12 12:46 PM by Alex Adrianson

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