State Supremacy in Decline

This paper discusses the dynamics of the international pharmaceutical industry, and how these are creating problems for the Australian government in its efforts to manage change within the regulated domestic industry. The paper argues that regulatory reform and industry development policy have eroded the capacity of the federal government to maintain the pricing regime associated with the Pharmaceutical Benefits Scheme (PBS) since 1950. The bargaining strength of the transnational firms which dominate the pharmaceutical industry in Australia is increasing; current global rationalisation of manufacturing and of R&D make threats to relocate more credible than in the past.