This briefing is based on a lecture given by George Teeling Smith.

At present Britain is one of the seven most successful countries in the world in its record of pharmaceutical innovation. The other six are the United States, West Germany, Switzerland, France, Italy and Japan. No other country has made anything approaching the same contribution to pharmaceutical progress as these seven nation~. However, their continuing success could easily be thwarted if their governments were to follow the example of some other countries, such as Australia, Canada, Greece and Spain, which have pursued a ‘cheap drug’ policy at the expense of the prosperity of their local pharmaceutical industry. Pharmaceutical manufacturers in Britain and the other successful countries do not want special protection or encouragement. However, they do need proper recognition of the economic conditions which affect their survival. This paper sets out to describe the ‘politics of prescribing’ in this context. Its aim is to create a better understanding of the dangers of an overenthusiastic ‘cheap drug’ policy, and of the economic misconceptions which lie behind the arguments for such an ill-conceived approach.