The Faces of Regulation: Profit and Price Regulation of the UK Pharmaceutical Industry after the 1998 Competition Act

Mestre-Ferrandiz, J.

May 2006

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This Briefing discusses, inter alia, the role of the Office of Fair Trading (OFT) in competition cases affecting the pharmaceutical industry. It does so in the context of a discussion of “ex ante” versus “ex post” approaches to regulation. This refers to the balance of reliance in a market on competition, sector specific regulation, and general competition law to deliver efficient outcomes. It was written prior to the OFT decision announced 30 September 2005 to carry out a market study of the Pharmaceutical Price Regulation Scheme (PPRS) as part of its review of government procurement arrangements in key sectors of the economy. The OFT market study can be thought of as looking at the effectiveness of one element of regulation – the ex ante sector specific regulation undertaken by the Government – rather than at the balance of regulation between the Department of Health as buyer and of the OFT in its role as the agent of general competition law. The paper does not address the OFT market study of the PPRS.

As with all OHE publications it was peer reviewed by its Editorial Board and by other experts in the field and is intended to be a contribution to research and to public policy making. It does not represent the views of the OHE or of its funding body the ABPI.