Background Note | HBS Case Collection | September 1991 (Revised August 1994)

Note on Pharmaceutical Industry Regulation

by Willis M. Emmons III

Abstract

Traces the evolution of U.S. regulatory policy towards the pharmaceutical industry over the course of the twentieth century. A major theme is the steady shift away from a policy of 'let the buyer beware' to the creation of a complex and time-consuming review process, administered by the U.S. Food and Drug Administration, in which both the safety and efficacy of each new drug must be demonstrated prior to sale in the United States. The basic economics of the pharmaceutical business are covered as well, including the trend toward greater emphasis on both marketing and R&D over the course of the century. The controversial issues of drug pricing, patent policy, and access to experimental drugs in the age of AIDS are explored as well. Includes a number of statistical charts and graphs of key indicators relating to the pharmaceutical industry in the post-WWII era.

Keywords: Safety; Industry Growth; Marketing; Research and Development; Health Testing and Trials; Economics; Pharmaceutical Industry; United States;

Citation:

Emmons, Willis M., III. "Note on Pharmaceutical Industry Regulation." Harvard Business School Background Note 792-002, September 1991. (Revised August 1994.)