Steps towards medication harmonization: A look at Europe and the United States

• Published in: Journal of comparative policy analysis Vol. 8; no. 3; pp. 225 - 240
• Main Authors: Cruz, Natalia Martin, Barahona, Juan Hernangomez, De La Fuente Sabate, Juan Manuel
• Format: Journal Article
• Language: English
• Published: Abingdon Routledge 01-09-2006; Taylor & Francis Ltd
• Subjects: Costs; Drugs; Pharmaceutical industry; Studies; Welfare; United States > US; Europe
• ISSN: 1387-6988; 1572-5448
• DOI: 10.1080/13876980600858424

Countries with distinct institutional endowments are trying to reach drug harmonization. The explanation given for the beginning of this process is that the rising health concerns governments have about patients transcend their different visions of social welfare and increasing bureaucratic costs, for both pharmaceutical companies and governments. The underlying reasons are, on the one hand, the high transaction costs between the pharmaceutical companies and the patients of medication and, on the other hand, the differing pharmaceutical regulations increase bureaucratic costs. This situation pushed Europe, Japan and the US into initiating a process of harmonization of regulation for new drugs. Even though harmonization is an on-going process, global and simultaneous medication product approval is not easy (the final objective of harmonization). In this paper we present, from a transaction cost approach, the economic reasons why pharmaceutical transactions need to be under public control. At the same time, we evaluate the public policies related to pharmaceutical exchange - technical guidelines, funding and price policies - as elements of the institutional endowment of countries that could facilitate or slow down the harmonization process. We use two protagonists of the harmonization process: Europe and the United States.