Public Demand for Medicines, Price Regulation, and Government — Industry Relationships in Spain

The authors' principal purpose is to study why the government in Spain has maintained price regulations on medicines during the last thirty-five years. The hypothesis is that price regulations were related to the regulatory style of the Spanish government in the 1960s and, since the last 1970s, have become a key instrument for preventing the pharmaceutical costs of the National Health System from rising. In order to test this hypothesis, two questions are considered. The first relates to how business interests and their main representative bodies have managed to influence the implementation of price regulations during the last thirty-five years. The second question concerns the extent to which changes in the prices of medicines have been effective in preventing increased costs of the Spanish National Health System drug bill between 1964 ad 1994. After analyzing the political economy of the price regulation of medicines and pharmaceutical cost-limiting policies during the last thirty-five years in Spain, and after estimating a function of the public demand for medicines between 1964 and 1994 in Spain, the authors extract the following two conclusions. First, price regulation has become a very useful instrument for preventing public pharmaceutical costs from rising since the late 1970s in Spain. Second, business interests have found it increasingly useful over the last thirty-five years to establish a stable framework in the market for medicines based on price regulation and the public provision of medicines.