Abstract: Drug quality is a key factor in ensuring public health, promoting economic development, maintaining social stability and safeguarding national security, and has always been highly valued by the government and society. In recent years, the frequent occurrence of drug safety issues has exposed the shortcomings of government departments in supervision and the inadequacy of drug testing mechanisms. Drawing upon the framework of government rewards and punishments, this paper delves into the evolutionary trajectory of production selection strategies employed by pharmaceutical enterprises manufacturing identical drugs, particularly in the context of rent-seeking behaviors. By constructing a Moran process stochastic evolutionary game model, the probability of mutual invasion between the strategy of producing high-quality drugs and the strategy of producing low-quality drugs under the dominance of expected income and external factors is calculated. Simulation analysis is conducted using Matlab 2022. The research finds that: first of all, when the rent-seeking cost is higher than a certain critical value, producing high-quality drugs will become a dominant strategy in the sector, and the critical value of rent-seeking cost is higher under the dominance of expected returns. Secondly, when the government exerts a high penalty, producing high-quality drugs is more likely to become an evolutionary stable strategy. With the decrease of the penalty amount, the strategy of producing low-quality drugs gradually invades the strategy of producing high-quality drugs. Thirdly, when the production cost of high-quality drugs is higher than the sum of the production costs and losses of low-quality drugs, the strategy of producing high-quality drugs will prevail only if the number of pharmaceutical companies is below a certain critical value. What’s more, for small populations, under the dominance of expected returns, the strategy of producing high-quality drugs keeps dominant. Under the dominance of random factors, the dominant strategy depends on the intensity of government supervision. Finally, combined with the stochastic evolutionary game process and simulation results, countermeasures and suggestions are put forward for improving the quality and production level of pharmaceutical enterprises.

Key words: government reward and punishment, rent-seeking behavior, drug quality supervision, Moran process, evolutionary game