Consumer Movement, Health, and the Pharmaceutical Industry

Taylor, D.

Monograph
January 1983

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In his Inquiry into the Nature and Causes of the Wealth of Nations, which was first published in 1776, Adam Smith placed special emphasis on the assertion that the ultimate purpose of producing any good (or service) is to meet the needs of its consumers. The economists of Western Europe and North America who have built on such thinking over the past two centuries have developed it into what is often referred to as the theory of consumer sovereignty. This claims that economic prosperity may be most efficiently pursued within societies which permit consumers maximum freedom to spend their money as they choose and which allow producers an equivalent freedom to compete to meet the market's demands.

The suggested advantages of this type of social system are two-fold. First, where free competition is working in a fair, or 'perfect', manner, resources will be allocated to those areas where expressed needs are greatest. Second, because free markets give individual citizens discretion in their consumption they prevent excessive power building up in the hands of political leaders and other elite groups. Thus all freedoms are protected.

However, in practice 'perfect' competition is rarely achievable. Smith himself, for instance, stressed (in some respects questionably) the need to stop producers gaining monopolistic positions and so resisting change and charging excessive prices. He was also aware of the difficulties facing consumers trying to get objective information about even the eighteenth-century market place. In the complex conditions of the twentieth century many commentators are doubtful about consumers' abilities to make rational purchasing decisions even when the facts about products and services are fully available.

In view of these and other difficulties it is now widely accepted that sophisticated economies have in many instances to be regulated by the state, or by voluntary or semi-official bodies, to ensure that they run relatively effectively. Health is an obvious example of an area where few would deny the value of extensive legal and financial interventions designed to protect those in need of care and support from the hazards of an untrammelled market. Yet at the same time a strong case can still be made to the effect that wherever possible direct consumer sovereignty should be encouraged to act as a powerful, if not the only, guiding force in the community.

The relatively recent emergence in the countries of North America and Europe of organised groups which aim both to distribute unbiased information about products

and services and to represent consumer interests in the political arena is one mechanism by which consumer sovereignty may be supported in the markets of the late twentieth century. The evolution of the consumer movement may consequently be thought to be a natural adaptation based firmly on the underlying traditions of the free world democracies. Some 'consumerists' may, of course, over-estimate the limitations of the market place and are unduly critical or even hostile towards industry. Yet the goal of the majority is constructively to enhance the working of Western society.

This fact is unfortunately not always appreciated by members of the industrial community, who may particularly resent consumer groups which work in an organised manner to alter the structure and 'ground rules' of the market place. Manifestations of such feeling may even include suggestions that consumerism and communism are more or less synonymous. And more generally, Jeremy Mitchell, a former director of Consumer Affairs at the Office of Fair Trading and currently the Director of the National Consumer Council, has noted that business is 'almost always negative, rarely positive' in relation to the consumer movement (Mitchell 1976). He urges industry and industry funded organisations to enter into a more constructive dialogue with consumers about matters of common interest.

This is the goal of the Office of Health Economics in producing this paper. It offers first a general review of the development and structure of the British and European consumer movements, which is supplemented by the data contained in the appendix. It then focuses more precisely on health care and medicine provision. The analysis provided highlights the special nature of pharmaceuticals as consumer goods and the difficulties inherent in attempting to create consumer sovereignty in the health sector.

The concluding section examines the particular responsibilities of and difficulties faced by the pharmaceutical industry in communicating with the public. It emphasises that, in the final analysis, there is an element of self-care involved in virtually all interactions between sick individuals and health care providers. It also argues that consumer power can play its most valuable and responsible role in circumstances where people have some insight into their condition and the care options open, and where they themselves actively participate in the processes of prevention, diagnosis and treatment. Thus although the diffusion throughout the population of information about topics like the proper use of medicines is a slow and problematic process there is a sound reason for all those involved in the health sector, including medicine makers, to participate in efforts aimed at overcoming the barriers to communication and effective health education.