Puerto Rican consumers should be able to choose which pharmacies to buy their medicines at, exercising their individual freedom, writes Jorge L. Rodríguez.
In recent weeks, a controversy has arisen over the possibility of preventing Walgreens pharmacies from selling drugs funded by the Government Health Plan, known as Plan Vital. Some pharmaceutical providers in Puerto Rico have urged the government to take protectionist measures to exclude Walgreens from the plan. Beyond the possible legal implications of these requests, it is pertinent to analyze this situation from the perspective of economic freedom and the free market, as well as its relevance to the well-being of society.
The development of a society depends on private investment and entrepreneurship, which only thrives in an environment that guarantees an adequate economic return. This return is achieved through a free market that fosters competitiveness, the highest quality, the best prices and innovation for the benefit of consumers. A free market is only possible when its four fundamental pillars - individual freedoms, the rule of law, private property rights and limited government - are guaranteed to function properly.
Puerto Rican consumers should be able to choose which pharmacies to purchase their medications from, exercising their individual freedom. The government should not interfere in people's decisions or dictate which pharmacies they can and cannot go to. It has been proven that markets function most efficiently and effectively when decisions are made freely and voluntarily by hundreds of thousands of people, according to their own circumstances, needs and preferences.
On the other hand, in a state governed by the rule of law, it is essential that laws are applied uniformly to all, promoting a reliable environment for decision-making. This framework allows the construction and development of markets where suppliers of products and services, in order to remain relevant and attractive, are forced to be competitive and innovative, and to offer the highest quality at the best price. In this way, consumers benefit and the foundations for sustainable development are laid.
As Nobel Prize-winning economist Friedrich A. Hayek pointed out, the role of government should be limited to “creating the conditions under which competition will operate as effectively as possible”. It is not up to the government to determine the winners and losers in the marketplace; that decision is up to consumers, acting freely according to their circumstances and needs. Puerto Rico should aspire to an environment where companies that are not competitive and do not provide the best possible prices, services and quality face the consequences.
Protectionism and discrimination negatively affect society by generating distortions that disrupt the efficient allocation of resources to meet market needs. Evidence has shown that protectionism harms economic growth, eliminates jobs, increases costs, reduces quality, impedes prosperity and lowers living standards. In short, protectionism benefits a few suppliers at the expense of all consumers.
Walgreens' participation in the U.S. market can bring efficiencies and innovation to the Puerto Rican market. Discriminating against Walgreens on the grounds that it could harm local pharmacies underestimates the ability of Puerto Rican pharmaceutical entrepreneurs to compete. Small, medium and large local businesses not only have the potential to be competitive and innovative, but also to expand and enter the international market by exporting their products and services.
It makes no sense whatsoever for the Government to exclude from the Plan Vital a supplier that can bring competitiveness and innovation, while generating significant efficiencies. The mere fact that Puerto Rico is an island and has a geographically limited market scale should be reason enough to try to attract suppliers from the United States and other countries. Moreover, when the government intervenes in the market by opening doors for some and closing them for others, it creates conditions conducive to corruption.
To exclude a provider of goods and services, as in this case within the health care market, and to use the State's monopoly of violence to prevent its participation in the Plan Vital constitutes improper government overreach, which undermines the proper functioning of the free market. This type of undue intervention harms economic freedom, discourages private investment and entrepreneurship, and deteriorates the business climate in Puerto Rico. If today the discrimination and exclusion are against Walgreens, who will be the next to be harmed, in what industry and with what justification?
This opinion article was originally published in Spanish by InDiario.
