Free Antibiotics

Some local grocery stores are offering free antibiotics through their pharmacies this winter. It started with a single chain and at least one other chain mimicked the decision. Why is this?

A nice story would be that the store is interested in public health and thinks that people would underutilize antibiotics if they had to pay the full price. For a segment of the US population this could be an issue. Certainly more people are without insurance now than at any time in decades in the United States. There is good economics evidence to show that pharmaceutical utilization goes up when people pay less for the pharmaceutical products. So, this could be part of the story.

The problem is that there is also evidence of overprescribing antibiotics in the United States. Not everyone was underutilizing care before the stores decided to offer free antibiotics. Some people always want the physician to give them something when they visit. Some physicians oblige their patients. Inappropriate use of antibiotics is potentially a problem because overuse can lead to the development of resistant strains of bacteria which we will then either need stronger medications to fight or have no medications available to fight them.

Another possible explanation is that the grocery store was not really thinking about the public health implications. From a PR point of view, it looks good to look like they are giving something away. If that creates more business in the store for pharmaceutical products, then the people who come to the grocery store will probably buy something else along the way. Even if the store loses money on the antibiotics, they will make it up in profits on other things that the customer buys.

The key to the last decision is that if one decision maker in a market (the grocery store) makes a decision based its own self-interest and doesn't consider all the effects (not just getting people in the store for prescriptions that would be filled anyway but potentially overutilizing prescriptions) there can be unintended consequences from which everyone else suffers.

Am I saying that if I had a prescription for an antibiotic this winter, I'd want to pay full price? Of course not--I'd rather get the prescription for free just as anyone else would. What I am saying is that I recognize that a decision for my benefit can sometimes have negative consequences for a larger group. Many economic decisions have that characteristic. One question we have to grapple with is how much we should regulate economic behavior to try to avoid such situations. To best answer that we need to determine which situations are most likely to be in the category of "good for some/bad for society". The example of grocery stores offering free antibiotics might not seem like his type of situation at first, but it is.