Comparative Analysis of American and British Models of Pharmaceutical Regulation

Date of Award

2003

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Coe, Richard

Keywords

Pharmaceutical Regulation, United Kingdom, United States

Area of Concentration

Economics

Abstract

This work set out to investigate two different models of pharmaceutical regulation, with emphasis on prices and demand, profits, direct-toconsumer advertising, safety, and innovation. Specifically, I attempted to determine the following: whether prices in the U.S. are unnecessarily high, whether U.S. profits are excessive, whether DTC advertising has negative effects on consumer well-being, whether the U.K. model promotes a greater level of overall safety, and whether pharmaceutical patent protection promotes innovation (and thus profits) at the expense of consumer welfare. Prices are examined using Producer Price Index data from both countries; a recent study establishes a link between reduced prices (via insurance) and increased demand. Profitability data from U.S. manufacturers is compared with target profit ranges established by the U.K. National Health System. Since DTC advertising is prohibited in European countries, advertising data is examined from a U.S. perspective only. Several studies and surveys regarding doctor and patient attitudes toward, as well as market share/size effects of DTC ads are examined as well. Safety is evaluated from three perspectives: comparison of the pre-market testing processes, of the post-approval monitoring systems, and of data regarding adverse drug event reporting mechanisms in the two countries. Finally, innovation is examined with emphasis on research and development expenditures, their relationship to the number of new drugs, and regulations that affect that relationship. Research indicates that prices are higher and more prone to increase in the U.S., that insurance increases demand by effectively lowering prices, that U.S. profit levels may be excessive, that DTC advertising has negative effects which outweigh its benefits, that the British safety mechanisms promote greater levels of safety, and that the U.S. is the more innovative of the pair. I conclude that profits should be limited in a fashion similar to the U.K. model in order to increase consumer welfare, that DTC advertising should be prohibited, that the U.S. should adopt safety mechanisms (in the three aforementioned areas) similar to those in the U.K., and that U.S. patent terms should be balanced in favor of innovation to avoid long-term losses to consumers. Future research should focus on determining acceptable profit levels and optimal patent terms.

Rights

This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.

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