Abstract

Drug’s fair price. From bilateral trade negotiations to the “drug single market” [1969-1993]

By Sabine Pitteloud University of Geneva and Pierre-Yves Donzé, University of Osaka Drug pricing and sales regulation is a highly political issue. The drugs market functioning has indeed little to do with free market mechanisms, as governments determine which products can be sold and under which conditions they will be reimbursed by social security agencies. Drawing on corporate, government and trade association archives, this contribution investigates how Swiss multinational enterprises (MNEs) from the pharmaceutical industry (Ciba-Geigy, Sandoz, Hoffmann-La Roche) navigated governments’ interventions in Europe and particularly in France, to preserve their profitability. In the 1970s context of economic turmoil and crisis of the welfare state, the French government used its discretionary power to favour pharmaceutical companies producing and conducting research on French soil and to arbitrate between private companies’ profits and the growing financial difficulties of the French social security system. Our analysis shows how non-market strategies, including diplomatic talks, were crucial for Swiss firms to cope with rising inflation, the freeze of drugs’ prices and increased customs controls targeting multinationals' transfer prices. The creation of the Single Market would ultimately offer the prospect of getting rid of such national discretionary power by harmonising drug regulations and prioritising market logic over neomercantilist approaches.