Michael Hanlon1, Raymond Zhang. 1. Institute for Health Metrics and Evaluation, 2301 5th Avenue, #600, Seattle, WA 98121, USA.
Abstract
BACKGROUND: Few data are available on what donors, governments and other implementing organisations pay for the medicines they procure. To partly address this shortcoming, we analyse transactions of pharmaceuticals on the WHO's essential medicines list. Our objective was to identify the determinants of prices paid for these drugs. METHODS: We used data from the 2008 version of the International Drug Price Indicator Guide. We normalised transactions by representing their value as a 'price per daily dose'. We used a mixed-effects regression model to quantify the impact of observable characteristics on prices paid. RESULTS: We present evidence of first-degree price discrimination in the market for essential medicines. We find that as a country's per capita wealth doubles, prices paid for the same pharmaceutical increase by 33%. CONCLUSIONS: These data indicate that purchasing agents from wealthier countries pay more for essential medicines, all factors constant. This behaviour is not a form of development assistance for health but rather is indicative of inefficient markets in which buyers' lack of information enables suppliers to charge higher prices than they could otherwise.
BACKGROUND: Few data are available on what donors, governments and other implementing organisations pay for the medicines they procure. To partly address this shortcoming, we analyse transactions of pharmaceuticals on the WHO's essential medicines list. Our objective was to identify the determinants of prices paid for these drugs. METHODS: We used data from the 2008 version of the International Drug Price Indicator Guide. We normalised transactions by representing their value as a 'price per daily dose'. We used a mixed-effects regression model to quantify the impact of observable characteristics on prices paid. RESULTS: We present evidence of first-degree price discrimination in the market for essential medicines. We find that as a country's per capita wealth doubles, prices paid for the same pharmaceutical increase by 33%. CONCLUSIONS: These data indicate that purchasing agents from wealthier countries pay more for essential medicines, all factors constant. This behaviour is not a form of development assistance for health but rather is indicative of inefficient markets in which buyers' lack of information enables suppliers to charge higher prices than they could otherwise.
Keywords:
Essential medicines; International Drug Price Indicator Guide; Pharmaceutical prices; Price discrimination; Price per daily dose
Authors: Jules M Janssen Daalen; Anouk den Ambtman; Mark Van Houdenhoven; Bart J F van den Bemt Journal: BMJ Open Date: 2021-07-15 Impact factor: 2.692