In Whom We Trust: The Role of Certification Agencies in Online Drug Markets

Bate Roger (), Jin Ginger Zhe () and Mathur Aparna ()
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Bate Roger: Department of Economics, American Enterprise Institute, Washington, DC, USA
Jin Ginger Zhe: Department of Economics, University of Maryland, College Park, MD, USA
Mathur Aparna: American Enterprise Institute, 1150 Seventeenth Street, Washington, DC 20036, USA

The B.E. Journal of Economic Analysis & Policy, 2014, vol. 14, issue 1, 111-150

Abstract: This article uses an audit sample and a consumer survey to study the intriguing market of online prescription drugs facing US customers and assesses the role that certification agencies play in online drug markets.On the supply side, we acquire samples of five popular brand-name prescription drugs from three types of online pharmacies: tier 1 are US-based and certified by the National Association of Boards of Pharmacy (NABP) or LegitScript.com, tier 2 are certified by PharmacyChecker.com or the Canadian International Pharmacy Association but not by NABP or LegitScript, and tier 3 are not certified by any of the four agencies. Most tier-2 and tier-3 websites are foreign. We find that 37 of the 365 delivered samples are different from the products we ordered and, therefore, non-testable. Conditional on testable samples, Raman spectrometry test finds no failure of authenticity except for eight Viagra samples from tier-3 websites. After controlling for testability and authenticity, tier-2 websites are 49.2% cheaper (p

Keywords: prescription drugs; counterfeit; online pharmacy; price; certification (search for similar items in EconPapers)
JEL-codes: D18 D8 I18 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1515/bejeap-2013-0085

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