Pharmaceuticals

We acknowledge the financial support of the Department of Health of the Province of Manitoba. [...] Put another way, the policy options explored here are to improve the competitiveness of pricing and the cost- effectiveness of product selection within the ACEI or A2RA drug categories but do not consider the competitiveness of pricing or the cost-effectiveness of product selection vis-à-vis other therapeutic categories. [...] Despite the importance of economies of scale and other supply-side limita- tions to competition in this sector, it is arguable that the unique constella- 4 PHARMACEUTICALS: THERAPEUTIC INTERCHANGE & PRICING POLICIES tion of incentives and information of decision-makers on the demand-side The "moral haz- in the sector is the primary reason that purchases may take place at prices ard" (the tendency [...] Increases in the cost of therapy are a function of changes in the price of drugs sold and changes in the mix of drugs selected per treatment. [...] Patients can pay the difference between the cost of the product prescribed to them and the "reference" amount the drug plan contributes.