Andreas Broscheid

Ending Cooperation:
A Formal Model of Organizational Change in German Pharmaceutical Interest Representation

 

Abstract

 
This paper uses a game theoretic model to investigate the 1993/94 split-up of the main German pharmaceutical association into an association for multinational, research-based companies and an association representing small and medium-sized firms. In order to explain the breakdown of cooperation among group members, the paper employs a model that combines collective action and bargaining. The model suggests that changing issues can play an important role in organizational change. In the case of the German pharmaceutical industry, the key issue changed from pharmaceutical registration to cost control. With respect to the former issue, the different factions in the pharmaceutical industry had complementary interests and were able to find a compromise position. The latter issue led to a conflict over the redistribution of scarce resources between the factions; formally, this meant that all issue dimensions were equally important to all factions. As a result, it became impossible to realize policy gains through a political compromise.
 

Zusammenfassung

 
Die folgende Studie untersucht den Austritt forschender Arzneimittelhersteller aus dem Bundesverband der Pharmazeutischen Industrie (BPI) zum Jahreswechsel 1993/1994 und die darauf folgende Gründung des Verbands forschender Arzneimittelhersteller (VFA). Unter Zuhilfenahme eines spieltheoretischen Modells, das Verhandlungstheorie mit der Theorie kollektiven Handelns verbindet, wird hier argumentiert, dass Änderungen im Issuekontext organisatorischen Wandel verursachen können. Im Falle der deutschen Pharmainteressen wurde die Zulassung von Arzneimitteln als dominantes Issue von der Frage der Kostenkontrolle abgelöst. Im Falle der Arzneimittelzulassung konnten die verschiedenen Herstellergruppen Kompromisspositionen erreichen, während im Falle der Kostenkontrolle zu einem schwer lösbaren Verteilungskonflikt zwischen innovativen, OTC- und Nachahmerprodukt-Herstellern führte, der auf die Gründung getrennter Verbände hinauslief.
 

Contents

 

	Introduction
	The BPI and pharmaceuticals policy before 1994
	A theory of coalition building in interest groups
	Basic assumptions
	Constant association policy: The free-rider outcome
	Association policy as a function of member contributions
	Summary of results
	Back to German pharmaceutical interests
	Changing issues: Safety versus price control
	Selective incentives: The changing Red List
	Conclusion

Appendix: Formal presentation of model, proofs

References