OTC Prescriptions Save on Medical Costs

The excellent Joel Selanikio writes on medical disruption from the rise of self-care:

I’ve been asked many times whether I think that AI will replace doctors. Never once have I been asked if I thought that OTC drugs could replace doctors. But that’s exactly what they have done: every time a drug switches from prescription to OTC, the total number of doctor visits drops.

In fact, a 2012 study by Booz concluded that

“if OTC medicines did not exist, an additional 56,000 medical practitioners would need to work full-time to accommodate the increase in office visits by consumers seeking prescriptions for self-treatable conditions.”

Fifty-six thousand doctors that we don’t need because of OTC drugs; that’s almost 6% of the practicing doctors in America. Think of the effect on healthcare costs.

Selanikio gives more examples of how AI plus super-computers, i.e. cell phones, can lead to better, at-home diagnosis and fewer physician hours (and more here). More generally, due to the Baumol effect the only way to save on medical care costs is by using less labor and more capital–this is rarely recognized.


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