In the US, neo-liberalism found its most committed and enthusiastic expression in the Republican Party’s antagonism to ‘big government’ – a recurrent theme in the rhetoric and often policy objectives of the administrations of Ronald Reagan, George Bush (senior) and George W. Bush. However, the Democratic Administration under Clinton also accepted the political philosophy of ‘market liberalization’, including the view that the state should help business interests achieve economic success even if that meant retreat from their regulation by government. A similar trend has been evident in western Europe and latterly the EU. Perhaps the most notorious European enthusiast for neo-liberalism was the UK’s Conservative Prime Minister, Margaret Thatcher, who sought to ‘free’ private industry from state control and regulation – a sentiment deviated from only marginally by the ‘New’ Labour Governments of Blair and Brown. Until the recent banking crisis of the late 2000s, all of these politicians and governments either actively promoted, or were willing to be persuaded of, the idea that pro-business deregulation was not merely in the commercial interests of industry, but ultimately for the greater good – the ‘public interest’.

In the pharmaceutical sector, a raft of pro-business deregulatory reforms ensued during the neo-liberal period (discussed in detail in Chapter 2). They included making the American and European government drug regulatory agencies largely and increasingly dependent on funds from the pharmaceutical industry; increasing the extent and flexibility of consultation between regulators and drug companies; reducing the amount and types of evidence that pharmaceutical firms had to collect to demonstrate the efficacy of particular categories of drugs in order to obtain marketing approval from regulators; and shortening the time taken by government regulatory agencies to grant marketing approval to drug companies for their products. Meanwhile, government regulation of pharmaceuticals maintained its legal responsibility and official democratic mandate to promote and protect public health. In that context, the crucial claim made by government and industry officials regarding the deregulatory reforms was that they would accelerate and increase pharmaceutical innovation, which was in the interests of patients and public health because they needed faster access to innovative drugs. Thus, one theory of pharmaceutical regulation since 1980, which we call ‘neo-liberal theory’, is that the pro-industry deregulatory reforms of that period were instigated by government in the interests of patients and public health. Implicit in the theory is the proposition that pharmaceutical innovations necessarily promise therapeutic advances for patients.

In this book, we put that theory, among others, to the test by examining both the macro-politics of regulatory change and the micro-sociology of individual drug development and regulation. We present the first social science research to provide an analysis of both American and supranational EU pharmaceutical regulation of innovative prescription drugs. Given that the direction of drug regulation has significant implications for patients, public health and healthcare systems, it is important to understand its socio-political and technical dynamics in order to learn lessons from the past and reflect on possible future policy options. We wrote this book because it advances those goals substantially beyond the limitations of existing literature.

Previous research on European pharmaceutical regulation is quite modest in extent and is almost always concerned with individual European countries or small groups of such countries. Dukes (1985) conducted an important survey of drug regulation across several different European countries, but it had no specific focus on innovative pharmaceuticals and pre-dated the neo-liberal era and the emergence of a supranational regulatory agency, the European Medicines Evaluation Agency (EMEA) – known as the European Medicines Agency (EMA) since 2010. In their valuable edited collection, Mossialos et al. (2004) provide a more recent overview of many different dimensions of pharmaceutical regulation in Europe, but attention to innovative prescription drugs is limited with most coverage ranging widely to pricing, over-the-counter drugs, ‘alternative medicines’, pharmacies and pharmacogenomics. While Abraham (1995a; 2009) and Daemmrich (2004) examine prescription drug regulation in-depth in the UK and Germany, respectively, by comparison with the US, and Hancher (1989) offers a similar type of comparison of the UK and France, those comparative studies, even combined, provide coverage of only three European countries. More significantly, their analyses are almost entirely confined to events before 1990 and make no attempt to consider supranational EU regulation. Wiktorowicz (2003) provides a more recent comparison of prescription drug regulation in the UK and France by comparison with Canada and the US, taking into account developments in the 1990s, but she also is little concerned with supranational EU regulation and innovative pharmaceuticals per se. Only Abraham and Lewis (2000) focus substantially on supranational EU pharmaceutical regulation since 1995, but their analysis is limited to its emergence and early years up to the late 1990s, rather than its effects, and addresses in only a preliminary way the nature of innovative pharmaceuticals within that regulatory system.

Much more has been published about American drug regulation. Temin (1980), Abraham (1995a) and Daemmrich (2004) produced broad analyses of US government control of pharmaceuticals spanning from the late nineteenth century and the origins of the American drug regulatory agency, the Food and Drug Administration (FDA). However, their studies do not stretch beyond the late 1970s or 1980s. Marks (1997) also made an important contribution to the twentieth-century history of US medicines regulation, particularly in relation to standards for drug trials and testing, but his investigation also terminates at 1990. Following in a similar tradition to Marks (1997), Greene (2007) examines post-war developments in the design, testing and promotion of diabetes and cholesterol drugs, though again the vast bulk of analysis is concerned with events before the 1990s, and most emphasis is given to drug development and marketing, rather than regulation per se.

None of those discussions of US drug development and regulation paid much attention to pharmaceutical product innovation within the American regulatory system. It has, however, been the concern of some other scholars. Most notably, Epstein (1996) offers an extensive account of how human immunodeficiency virus (HIV)/acquired immunodeficiency syndrome (AIDS) patients sought to influence the science underpinning pharmaceutical testing and regulation in order to facilitate faster and wider access to innovative AIDS drugs, but his analysis is entirely circumscribed by the HIV/AIDS field. In a quite different approach to pharmaceutical innovation, Angell (2004) examines the extent to which innovative pharmaceuticals across many therapeutic fields owe their origins to industrial research and offer value to patients and healthcare systems. Although the role of drug regulation and the FDA forms part of her discussion, the overwhelming majority of her critique is aimed at the activities of the pharmaceutical industry.

The two main recent analyses of US drug regulation are provided by Hilts (2003) and Carpenter (2010a).¹ Both take a historical approach, which includes retracing twentieth-century regulatory developments before the neo-liberal era. About two-thirds of Hilts (2003) and over three-quarters of Carpenter (2010a) are concerned with events before 1980, also previously investigated by Abraham (1995a), Daemmrich (2004), Marks (1997) and Temin (1980), which need not detain us here. However, the other parts of Hilts (2003) and Carpenter (2010a) make important contributions to any analysis of the FDA in the neo-liberal era, with which we shall certainly engage throughout this book, though only one chapter of Carpenter (2010a) is devoted to neo-liberal influences on the FDA proper. Hilts (2003) emphasizes the impact of ‘deregulatory politics’ and the New Right’ on the FDA after Reagan’s election to the presidency, though much of his discussion revolves around controversies over the agency’s regulation of food, tobacco and medical devices, rather than drugs. Carpenter’s (2010a) focus is fixed on pharmaceutical regulation throughout, but his investigation is less about US drug regulation as such, even less about the relationship between regulation and innovative pharmaceuticals, and much more an account of the organizational dynamics of the FDA within its social and political context. A limitation, therefore, of both Hilts (2003) and Carpenter (2010a) for our purposes of analysing US drug regulation is that they are, in effect, studies of the FDA. Indeed, Angell (2010) criticizes Carpenter (2010a) for neglecting to consider sufficiently industry influence on the FDA. Carpenter’s (2010b) rebuttal accuses her of erroneously misrepresenting him, but also confirms that his investigations lead mainly elsewhere to the question of how the FDA has managed to maintain its power and influence, or found them diminished, in the face of wider neo-liberal politics in the US. Of course, as we embark on our analysis of US and EU drug regulation, a more fundamental limitation of all the major works by these American scholars, apart from Daemmrich (2004), is that their examination of pharmaceutical regulation and/or innovation is entirely confined to the US.²

For instance, Bernstein (1955), writing from an American perspective, contended that government regulatory agencies, which typically formed in the aftermath of some public disaster associated with industrial activity, initially regulated the industry zealously in the public interest, but gradually over time became captured by the regulated industry, so that it eventually came to regulate primarily in the interests of the industry, rather than the public interest, until another public disaster when the cycle would restart. The school of thought derived from Bernstein’s (1955) writings was to become known as ‘capture theory’. According to capture theory, regulatory agencies created after some public disaster are given a legal mandate by the Legislature and the Executive arms of the state to regulate an industry in the public interest. When the regulatory agency shifts away from that mission due to capture, it is known as ‘administrative drift’ or ‘bureaucratic drift’ because the bureaucratic arm of government (the regulatory agency) has drifted away from the mandate of its Legislative and Executive arms.

Within capture theory, the focus is very much on the relationship between the regulatory agency and the regulated industry. Capture may occur because agency officials or experts, who sit on regulatory agencies’ advisory committees, develop attitudes and obligations towards pharmaceutical firms resulting from hospitalities or consultancies. Capture is likely to be increased where informal consultation and meetings between government regulatory officials and industry is permitted and encouraged because the opportunities for regulated firms to lobby government officials are expanded.

One of the most instructive books written about the dynamics of regulatory capture was compiled by Owen and Braeutigam (1978) as a ‘how to’ manual for industry that recommends techniques with which to manipulate government regulatory official and expert advisers. On lobbying regulatory agencies, they provide the following advice to regulated firms:

In the decades following Bernstein’s articulation of capture theory, political scientists, especially in Europe, began to theorize governance and political power in terms of relations between organized interests and the state. By analysing the influence of the trade union movement on UK Labour governments, Middlemas (1979) drew attention to the importance of organized interests in gaining privileged access to the state, above and beyond other interest groups, to the extent that the organized interests governed in partnership with the state, including the delegation of governing powers to those interests in the form of self-regulation. Middlemas (1979) referred to this arrangement as ‘corporate bias’ and its proposition subsequently became known as ‘corporate bias theory’.

Corporate bias theory differs from capture theory particularly because it suggests that regulation and regulatory decision-making needs to be located in a broader political context than solely the relations between regulator and regulatee. Specifically, the wider constituents of the state must be taken into account, not only the ‘bureaucracy’ (regulatory agencies). The politics of the Executive (the Administration in the US, and the Council of Ministers and national European governments in the EU) and the Legislature (the Congress in the US and the European Parliament in the EU) are also regarded as highly significant in corporate bias theory. For corporate bias theory, the influence of an organized interest, such as the pharmaceutical industry, may extend to lobbying the top strata of government within the Executive and the Legislature. Representatives of the organized interest may even establish themselves as key advisers to the Executive or sit on high-level joint committees with government Ministers/Secretaries of State setting the policy agenda for regulation of that interest-group/industry. Hence, corporate bias theory allows that a possible mechanism by which industry can drive regulation in its own interests is via the Executive and Legislature without necessarily effecting direct capture of regulatory agencies because the bureaucracy (the regulatory agencies) may be made responsive to industry interests by its constitutional masters in the Executive and Legislature.

Unlike, capture theory, corporate bias theory does not hypothesize a cyclical process of regulatory change. Nor does it postulate that government agencies necessarily begin life with high ambitions to regulate industry vociferously in the public interest. A further difference is that capture theory assumes that pro-industry (de)regulation is associated with the capture phase (of the regulatory cycle) during which the government agency is relatively passive and powerless. By contrast, corporate bias theory allows for the possibility of a relatively strong, pro-active state, which may encourage pro-business (de)regulation in collaboration with industry. Conve...