Theory and Evidence
- New Horizons in Public Policy series
Chapter 9: UK Pharmaceutical Policy
The tendency of doctors to overprescribe medicines because they do not bear the cost of the decision to prescribe, and the monopoly that pharmaceutical companies enjoy in the production of certain medicines under patent, are both long-standing justifications for pharmaceutical public policy to regulate the price of medicines (Bloom and Van Reenen, 1998). All OECD countries have some form of regulation of the pharmaceutical industry and mechanisms to control public expenditure on medicines. These policies have been under budgetary pressure in most countries since the 1980s due to the combination of an ageing population and technological development. NHS expenditure on prescription medicines increased by almost 10 per cent per annum during the 1990s (OHE, 2002). This fiscal pressure has produced a series of policy dynamics that exemplify how policy processes are as much about choosing between different reasons for action or different values, as they are about how to achieve particular values in isolation. This insight complements the point made in the theoretical section of the book: a dynamic perspective raises serious doubts about the instrumental, parametric version of rationality that exists in rational choice theory by challenging the notion of a straightforward policy ‘choice’. Public policy towards pharmaceuticals can be divided into those aimed at influencing the demand for medicines, chiefly to increase the sensitivity of GPs to the cost of medicines, and those aimed at regulating the supply side, the price paid for medicines by public authorities. In the UK, since the mid 1980s there have been a...
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