TY  - JOUR
AU  - Bate,Roger
AU  - Jin,Ginger Zhe
AU  - Mathur,Aparna
TI  - Does Price Reveal Poor-Quality Drugs? Evidence from 17 Countries
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16854
PY  - 2011
Y2  - March 2011
UR  - http://www.nber.org/papers/w16854
L1  - http://www.nber.org/papers/w16854.pdf
N1  - Author contact info:
Roger Bate
American Enterprise Institute
1150 Seventeenth Street, NW
Washington DC 20036
E-Mail: rbate@aei.org

Ginger Z. Jin
University of Maryland
Department of Economics
3115F Tydings Hall
College Park, MD  20742-7211
Tel: 301/405-3484
Fax: 301/405-3542
E-Mail: jin@econ.umd.edu

Aparna Mathur
American Enterprise Institute
1150 Seventeenth Street, N.W.
Washington, DC 20036
E-Mail: amathur@aei.org
AB  - 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. 
ER  -