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

Roger Bate, Ginger Zhe Jin, Aparna Mathur

NBER Working Paper No. 17955
Issued in March 2012
NBER Program(s):   IO

In an audit study, 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 (CIPA) but not by NABP or LegitScript, tier 3 are not certified by any of the four agencies. Most tier 2 and tier 3 websites are foreign. Using Raman spectrometry test, we find no failure of authenticity in tier 1 or tier 2, the only failures are Viagra from tier-3 websites. Except for Viagra, tier 1 websites on average charge 51% more than tier 2 sites in final price.

In addition, we conduct a survey of buyers of prescription drugs. Results show that 61.54% of respondents do purchase drugs online and mostly from foreign websites, citing cost saving as the leading reason. These findings confirm the FDA warning against rogue websites but suggest that a blanket warning against foreign websites may deny consumers substantial savings from certified tier 2 websites.

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This paper was revised on January 24, 2013

Acknowledgments

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