The Formal Structure of the U.S. Food and Drug Administration – Its Effects on Pharmaceutical Spending and Drug Innovation Character

Abstract

The pharmaceutical market is considered as one of the most regulated in the developed world. Still, we see an ongoing trend with increasing global pharmaceutical spending and lack of breakthroughs in life science discoveries. The reasons are different depending on which source you rely on. The payers, the originators and the drug agencies are arguably the key players in this market. This study examined the current status of the industry, how the market rules have changed and how the absence of isomorphism between the world’s biggest drug agency, the U.S. Food and Drug Administration, and the pharmaceutical companies may be a source of the problems. The employees interviewed at the agency partly explained their views, which mostly were consistent with the current limited literature. In conclusion, the formal structure of an independent organization limits the isomorphism with the environment, and thereby the success for cost containment and drug innovation management.