Does price reveal poor-quality drugs? Evidence from 17 countries

Roger Bate, Ginger Zhe Jin and Aparna Mathur ()

Journal of Health Economics, 2011, vol. 30, issue 6, 1150-1163

Abstract: Focusing on 8 drug types on the WHO-approved medicine list, we constructed an original dataset of 899 drug samples from 17 low- and median-income countries and tested them for visual appearance, disintegration, and analyzed their ingredients by chromatography and spectrometry. Fifteen percent of the samples fail at least one test and can be considered substandard. After controlling for local factors, we find that failing drugs are priced 13.6–18.7% lower than non-failing drugs but the signaling effect of price is far from complete, especially for non-innovator brands. The look of the pharmacy, as assessed by our covert shoppers, is weakly correlated with the results of quality tests. These findings suggest that consumers are likely to suspect low quality from market price, non-innovator brand and the look of the pharmacy, but none of these signals can perfectly identify substandard and counterfeit drugs.

Keywords: Counterfeit; Medicines; Price; Signal; Original data (search for similar items in EconPapers)
JEL-codes: D83 I18 L15 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:30:y:2011:i:6:p:1150-1163

DOI: 10.1016/j.jhealeco.2011.08.006

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