Divergent spender: State-societal and meso-organisational mechanisms in the containment of public spending on pharmaceuticals in a liberal capitalist democracy

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Abstract

For two decades, New Zealand has been placed consistently at the foot of OECD rankings for state expenditure on pharmaceuticals. In this article, we explore New Zealand's containment of pharmaceutical spending as a 'divergent' case of pharmaceutical policy in a liberal democracy. To elucidate the likely institutional mechanisms and interests behind this phenomenon, we conducted a case study of New Zealand's drug reimbursement policy. In doing so, we derived sensitising concepts from major accounts of pharmaceutical policymaking (Corporate Bias Theories and Reputational Theory) and theories of the western state (Historical Institutionalism and Corporate Domination Theory). Drawing on 28 expert interviews and documentary analysis, we identified three main mechanisms of spending containment. First, New Zealand's state bureaucracy use pricing strategies that rely on a spending containment strategy coordinated by bureaucratic managers. Second, these managers shape the policy preferences of expert committees involved in scientific drug assessment. Third, on a meta-level, conditions for spending containment are enabled by the judicial-legislative arena. As such, we find support for Historical Institutionalism and Reputational Theory and more limited support for Corporate Bias Theory and Corporate Domination Theory. Our explanation posits further conceptual linkages between the macro/societal and meso-organisational theoretical levels.

Original languageEnglish
Pages (from-to)1518-1539
Number of pages22
JournalSociology of Health and Illness
Volume43
Issue number6
Early online date15 Jul 2021
DOIs
Publication statusPublished - 31 Jul 2021

Bibliographical note

Funding Information:
The authors received no additional funding for this work. BM pays special thanks to Professor Lawrence King for supporting this research while it was undertaken at the University of Cambridge. BM also thanks Steve Main. BM and PO are very grateful for the assistance of the editors at Sociology, Health and Illness and for two anonymous reviewers for their very constructive comments.

Keywords

  • New Zealand
  • bureaucracy
  • neo-liberal corporate bias
  • pharmaceutical expenditure
  • reputational theory
  • state theory

ASJC Scopus subject areas

  • Health(social science)
  • Health Policy
  • Public Health, Environmental and Occupational Health

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