The Minister of health has erred in his approach to the taxing of free drugs. What has been imposed is not a dispensing fee at all; it is simply a tax and, more so, poor public policy.
The policy is not certain in its incidence and it lacks a clear objective with respect to cost-effectiveness. Put another way, it is hurting those for whom it is intended to help because it is not based on the ability to pay principle.
The policy is yet another example of an unprepared government.
Health care policy cannot be approached strictly on the basis of economics; there is a critical social component to it. It is well known that the cost of delivering health care rises faster than the cost of living. This fact makes it mandatory for any government to tread cautiously with regard to health care especially for the elderly.
When the Government introduced the dispensing fee, it also changed many critical drugs on the formulary. This served as a double blow to the beneficiaries: they now have to pay a fee/tax that increases with the cost of the drug and they were not given the opportunity to stay with the effective drugs that were on the formulary.
From a policy standpoint, there is only one reason for changing the effective drugs, and that is cost. If the dispensing fee does not have to be paid at public pharmacies, then theoretically the minister is not expecting to benefit financially from the imposition of the dispensing fee. Furthermore, the fee at the private pharmacies is intended to go into the pockets of the owners.
As public policy, the fee is therefore intended to make the users pay for the mark-ups imposed on the free drugs by the private pharmacists. This is exactly why the dispensing fee has come in the form of a tax and not in the form of a cost on the transaction over the counter to those who benefit from the “free drugs”. The truth is, the drug is no longer free!
If cost is the issue and the dispensing fee does not address the issue, then changing the drugs on the formulary is the way in which cost has been addressed. It is that simple!
In order to sell the changes to the service of free drugs to Barbadians, the minister uses the issue of non-Barbadians having access to the service to hype the public relations.
As a proportion of the drug service, the latter is minuscule in financial terms but major in political terms.
Good politics does not always have to make economic sense to impact on an unsuspecting electorate.
In the circumstances, the debate seeks comfort in ignorance while neglecting the severe consequences of the changes on thousands of Barbadians, especially the aged, the working poor and those at the bottom of the income ladder.
There have been unintended consequences for several legitimate users of the drug service who in their golden years simply cannot handle the financial pressure brought on by the changes in policy. The changes are symptomatic of a government that has lost its way and is now prepared to rake in any revenue without reference to the bigger picture of incidence.
Perhaps the most recent example of this failure to understand the bigger picture came when the Minister of Finance said that taxes on gasoline cannot be reduced because corporation taxes have declined.
Having spent its way into a big hole, the Government is prepared to tax its way out of it. This is not possible, and the dispensing tax is a perfect example.
