A Theoretical Study of Drug Safety Regulation

In order to ensure drug safety, the government has tried his best to strengthen regulation but it´s not always effective. Whether inspections or penalties is more efficient to ensure the drug safety? With the theory of microeconomics, the author establishes regulation threat model to answer it. The author draws a conclusion that regulation threat can decrease violation of the regulations. The threat function of the frequency of penalty is more effectual than that of the amplitude of penalty. The total social utility can be increased more efficaciously by increasing the amplitude of penalty than the frequency of penalty. The amplitude and the frequency of penalty cannot be increased illimitably, and the total social utility is maximization when they are increased to p¿ and i¿. The author puts forward a suggestion that we should formulate our regulation focus according to different regulation stages, we should focus on strengthening the frequency of penalty in the early stage, focus on strengthening the amplitude of penalty in the middle stage, focus on reformation in the late stage.