Interest Groups And The Change Of The Drug Safety Regulation Institution In China

In recent years, drug safety incidents have occurred sometimes, and drug safety regulation becomes the issue that the public and the academic community concern about very much. Media coverage and academic studies have mostly focused on drug safety incidents themselves, corruption of officials in the regulatory agency and regulatory system issues, rarely out of drug safety supervision act itself, from an economic development background and specific institution to analyze that institution impact on the stakeholders'behaviors of drug safety regulation. This paper reviews history and restructuring of the drug safety regulation in China, trying to use economic basic theory to explain the evolutional logic of the Chinese drug safety regulation institution, which purpose is to make people understand the policy outcomes, the effectiveness of the drug safety regulation and provide a theoretical insight for problems that arise in current drug safety regulation.This paper employs new institutional economics approach to study on Chinese drug safety regulation institution. In detail, this paper uses frontline research results of interest group regulation theory, that is, interest group politics principal-agent theory to explain the reform of drug safety regulation. In this analytical framework, the pharmaceutical enterprise and consumer's groups are two principals with conflicting interests, and politicians are agents. Pharmaceutical enterprise and consumer groups are trying to put pressure on politicians through the corresponding channels, thus affecting the result of institutional arrangements.Analytical framework of this article stresses that the information plays an important role in the interest group political pressure function. Overall, the large number of consumers is not easy to organize and the cost of individual participation in political activities is also very high, but their benefits are negligible, so the members of consumer groups usually do not participate in political activities with enthusiasm, and chose free-rider, eventually leading to its minimal impact on policy outcome. On the contrary, the pharmaceutical enterprise group, because of their small number, free-rider problem is easy to solve, group cohesion is very strong, and easy to form a collective action, so they are more advantageous in political activities. Economic theory generally believes that government regulation is often controlled by special interest groups. However, this political results trend is changing quietly because the media market changes. For the media greatly reduce the cost of consumers participating in political activities by providing a platform for exchange of information and supervision by public opinion. Therefore, the media participates in institutional reform, changing the relative power of influence that interest groups impact on institutional outcome, overcoming political and economic power that resists to reform of regulatory structure. Meanwhile, the media reduce institutional transaction costs of the new institution by improving methods of the information released, monitoring, evaluation the effectiveness of policies, thus supporting the adoption and implementation of the new instituion.This analysis shows that the high information cost makes consumers take slack behavior in voting, and the do not put enough pressure on regulatory decision-makers in affecting drug safety regulation, a very long time, resulting in Chinese drug safety regulation institution have tended to protect the development of the pharmaceutical enterprises, but do not give attention to the interests of consumers that it should. However, if the cost can be transferred to a third party, consumers will tend to get more election information, actively participate in voting, and put more pressure on the regulatory decision-makers, finally, institution arrangement is in their favor. The media lower the cost of consumers'voting by providing information to the general public. And the media reduce the monitoring costs to consumers by overseeing misconduct of government officials. Therefore, the media involved in institutional arrangement of the drug safety regulation, making consumers has a comparative cost advantage in influencing the institutional arrangements of drug safety regulation, thus changing the comparative advantage between consumer group and pharmaceutical enterprise group in influencing drug safety regulation, leading to drug safety regulation to develop in favor of consumer direction.