So called «Managed Competition» may be another way to tackle the problem. The cost-containment policy in the US rests mainly on the idea of intensifying competition between companies. The GPs Budget Holding reform in the UK shares the same view.
Competition may occur in several ways, through the development of a generic market which puts a pressure on the non innovative segment of the drug market, through the formularies policy, etc. The advantage is that it is essentially a flexible, non-government policy, the main actors being companies and insurers. Although it would certainly be beneficial to promote competition in health care markets, especially in Europe, it is doubtful that competition only, even «managed», is the definite solution.
As we have shown before, competition does not necessarily mean price competition in the drug market: the more innovative are the products, the less competitive are the markets. Monopoly situations are most of the time unavoidable as they often result from the scientific advance of a company. And monopolistic competition is perfectly consistent with high prices levels.
Besides, it is unclear who should make the decisions: the buyers, the insurance companies, the physicians, the insured people, the general public? Practically, it is most often insurers that are in position to choose. But, the legitimacy of this position implies that insurance companies are themselves in a competitive situation. It is hardly the case in Europe, where insurance systems are and will remain public and state regulated.