Regulatory theory: commercially sustainable markets rely upon satisfying the public interest in obtaining credible goods

Abstract

Regulatory theory is premised on the failure of markets, prompting a focus on regulators and industry from economic perspectives. This article argues that overlooking the public interest in the sustainability of commercial markets risks markets failing completely. This point is exemplified through health care markets - meeting an essential need - and focuses upon innovative medicines as the most desired products in that market. If this seemingly invulnerable market risks failure, there is a pressing need to consider the public interest in sustainable markets within regulatory literature and practice. Innovative medicines are credence goods, meaning that the sustainability of the market fundamentally relies upon the public trusting regulators to vouch for product quality. Yet, quality is being eroded by patent bodies focused on economic benefits from market growth, rather than ensuring innovatory value. Remunerative bodies are not funding medicines relative to market value, and market authorisation bodies are not vouching for robust safety standards or confining market entry to products for 'unmet medical need'. Arguably, this failure to assure quality heightens the risk of the market failing where it cannot be substituted by the reputation or credibility of providers of goods and/or information such as health care professionals/institutions, patient groups or industry.

Assessing Definitions and Incentives Adopted for Innovation for Pharmaceutical Products in Five High-Income Countries: A Systematic Literature Review

“…On average, five to six articles were published each year and of 65 articles, 38 (58%) were published from 2010 to 2015 and 27 (42%) were published from 2016 to 2020. Several articles referred to the US Food and Drug Administration's (FDA) definition of innovation in the USA [21][22][23][24][25][26][27][28][29], the National Institute for Health and Care Excellence's (NICE) including Kennedy's short study for NICE in the UK [30][31][32][33][34][35][36][37] and the Amelioration du service [38][39][40][41][42]. The most common factor considered while defining innovation was therapeutic benefit as a measure of innovativeness across countries.…”

“…UK In the UK, "innovation in the area where there is an unmet need that improves outcomes and ensures value for money to the National Health Service (NHS) with better access to effective medicines" is defined as innovation [46]. According to NICE, innovation is defined as a treatment that produces demonstrable and distinctive benefits of a substantial nature that may not be adequately captured in the quality-of-life measure used [31,32]. Kennedy in his short study for NICE [30,33,34], suggested that innovation is something that is new, improves on existing interventions, and offers something more in the way of a step change in terms of outcomes for patients.…”

“…The SLR also identified aspects of innovation that were specific to certain therapy areas presented in Table 7. The most commonly reported therapy area was oncology (9 articles), including 3 studies from the USA [27,41,44] 2 articles from France [49,71], and 4 "multi-country" articles [32,47,72,73]. New and innovative drugs that offer substantial health benefits over existing treatments by significant increase or improvement in overall survival (OS) or progression free survival (PFS) are some of the frequently reported definitions of innovation in cancer [41,44,47].…”

“…New and innovative drugs that offer substantial health benefits over existing treatments by significant increase or improvement in overall survival (OS) or progression free survival (PFS) are some of the frequently reported definitions of innovation in cancer [41,44,47]. Innovation related to therapeutic benefit or clinical benefit, and precision medicine or personalized medicine, is among the main drivers in the area of oncology [27,32].…”