TY  - JOUR
AU  - Bate,Roger
AU  - Jin,Ginger Zhe
AU  - Mathur,Aparna
TI  - In Whom We Trust: The Role of Certification Agencies in Online Drug Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17955
PY  - 2012
Y2  - March 2012
UR  - http://www.nber.org/papers/w17955
L1  - http://www.nber.org/papers/w17955.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  - 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.
ER  -