Intervention and Technological Innovation: Government and by Jeremy Howells, Ian Neary

By Jeremy Howells, Ian Neary

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Sample text

As most of the domestic industry is involved almost exclusively with pharmaceutical production, they have no choice but to pay close attention to what the government is saying, and in particular the MHW. In the UK by contrast, a large proportion of the domestic production of both UK- and foreign-owned companies is exported. Moreover, foreignowned companies are important providers of drugs for the National Health Service, foreign-owned companies are often important employers in some regions, whilst several of the major companies are also involved in the production of other commodities.

This is permitted by the DoH to ensure a sufficient margin to encourage a certain level of wholesaling service to the retail pharmacists. Until the late 1970s all pharmaceuticals were subject to resale price maintenance (RPM) but price discounting on ethicals became widespread and RPM is now only enforced in relation to OTC medicines. In line with its other cost containment policies of the 1980s, the DoH sought to obtain benefit for the NHS from this discount system. A 'claw back' mechanism was created whereby retail pharmacists receive the full cost of a product dispensed less a notional level of discount assumed to have been received by the pharmacist from the wholesaler.

This different approach to health care finds its way into the statistics on health care expenditure as in the UK the statistics will include the cost of preventative care and normal childbirth while the Japanese figures do not. 1 indicate the general comparative position of Japan and UK within the developed world. Although Japan and the UK organise their health systems differently it is clear from these statistics that they are spending a similar proportion of national income on health care and that the total cost of health care is rising rapidly.

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