NHS prescription charges need a major shake-up with reforms to help

the less well-off and protect everyone against huge bills, says a report

published today.

The problem with the system of drug prescribing is that advances in

medical technology have dramatically increased the cost of health care.

Public spending will have to be carefully controlled, in the next few

years, says the independent policy think tank, the Institute of Economic

Affairs.

It calls for all exemptions to be scrapped and replaced by a new

system of ''catastrophe insurance''. Those on income support could be

given a plastic Medicard to get their treatment.

According to authors David G. Green and David A. Lucas: ''Under the

current system, 48% of the population and fully 82% of prescriptions are

exempt from any charge.

''Only 8% of the total cost is collected in charges. Compared to other

European countries our exemptions are too wide and our charges are too

low.

''People who are exempt, such as diabetics, are not required to pay

for any medicines, whereas in other European countries free drugs are

usually only available if they are necessary to treat the exempt

condition.

''Yet some people, with a strong case for exemption, and who would be

exempt if they lived in other European countries, are required to pay.''

Government controls may have perverse effects on doctors' decisions,

with damaging results for patients. There is already evidence that

therapeutic advances are being withheld from NHS patients, not because

of doubts about safety, but to curb spending, says the report.

It may also restrict the ability of the drugs industry to keep

producing the technical advances needed to maintain progress in

conquering disease.

''What really matters is that the least well-off can still afford the

medicines they need, and that everyone is protected against exceptional

costs.

''Most people can afford to pay for most of their drugs most of the

time, and there is no reason to interfere with that.

''All exemptions should be abolished and replaced by a new system of

'catastrophe insurance'. If drugs are sold at market prices, as we

propose, the general rule should be that persons falling below the

income support level would qualify for free prescriptions for themselves

and their dependants.

''Other special conditions should no longer entitle people to free

drugs.

''Instead, the existing pre-payment or 'season ticket' system should

be extended so that it becomes a system of voluntary 'catastrophe

insurance' for all.

''Those on income support or buying a pre-payment certificate could be

given a plastic Medicard, like a credit card, which would be presented

to the pharmacist, who would dispense the prescribed medicine without

further charge.

''The pharmacist of course would not know whether the customer had

paid for the card or not, removing the stigma that can be attached to

those on social security.''

The amount of money raised would depend on how many people bought the

Medicard rather than pay for each prescription. It could be between #1

billion and #2.7 billion.

The institute's estimate based on 70% of pensioners and 20% of other

people buying the Medicard, is that about #1.5 billion would be raised

-- nearly six times the meagre #250m raised by prescription charges.

This would be a worthwhile contribution towards funding welfare

services in the current difficult financial climate, says the report.

* Medicard: A Better Way To Pay for Medicines? is available from the

IEA, 2 Lord North St,London SWlP 3LB at #5.45.