The Political Economy of Pharmaceutical Price Controls: Turkey in Comparative Perspective

Allowing pharmaceutical producers to charge high prices may restrict access to essential medicines, crowd out non-pharmaceutical health expenditure and strain public health budgets. Why then are some states lenient and others strict in the regulation of pharmaceutical prices? This article studies the political economy of pharmaceutical price controls, a currently under-researched field. The regulation of pharmaceutical prices is conceptualized in terms of two overlapping regulatory frameworks, namely (a) intellectual property rights and (b) price controls. The article focuses on exploring the conditions under which states with strong protection of intellectual property rights decide to move from lenient to strict price controls. This is accomplished through an analysis of Turkey’s sudden shift from lenient to very strict price controls in the 2009-2012 period. Based on this extreme case study, the article identifies variables and associated causal mechanisms that are likely to drive the emergence and persistence of strict pharmaceutical price controls: (i) The salience of health policy, (ii) the presence of effective industrial policy goals, (iii) the interests of business groups close to the government, (iv) previous disruptive events such as corruption scandals, (v) the size and growth potential of the domestic pharmaceutical market, and (vi) the amount of political blame the government receives for medicine shortages. Finally, the article conducts plausibility probes of these variables and causal mechanisms for a series of other country cases.