Does Price Reveal Poor-Quality Drugs? Evidence from 17 Countries

Roger Bate, Ginger Zhe Jin and Aparna Mathur ()

No 16854, NBER Working Papers from National Bureau of Economic Research, Inc

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. Indeed, many cheaper non-innovator products pass all quality tests, and are genuine generic drugs.

JEL-codes: D18 D4 D8 I11 I18 L15 (search for similar items in EconPapers)
Date: 2011-03
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Published in the Journal of Health Economics 30 (2011) 1150-1163

Downloads: (external link)
http://www.nber.org/papers/w16854.pdf (application/pdf)

Related works:
Journal Article: Does price reveal poor-quality drugs? Evidence from 17 countries (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:16854

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16854

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().