Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment^*

Abstract

It is often argued that cost-sharing-charging a subsidized, positive price-for a health product is necessary to avoid wasting resources on those who will not use or do not need the product. We explore this argument through a field experiment in Kenya, in which we randomized the price at which prenatal clinics could sell long lasting anti-malarial insecticide-treated nets (ITNs) to pregnant women. We find no evidence that costsharing reduces wastage on those that will not use the product: women who received free ITNs are not less likely to use them than those who paid subsidized positive prices. We also find no evidence that costsharing induces selection of women who need the net more: those who pay higher prices appear no sicker than the average prenatal client in the area in terms of measured anemia (an important indicator of malaria). Cost-sharing does, however, considerably dampen demand. We find that uptake drops by 75 percent when the price of ITNs increases from zero to $0.75 (i.e. from 100 to 87.5 percent subsidy), the price at which ITNs are currently sold to pregnant women in Kenya. We combine our estimates in a cost-effectiveness analysis of ITN prices on child mortality that incorporates both private and social returns to ITN usage. Overall, our results suggest that free distribution of ITNs could save many more lives than cost-sharing programs have achieved so far, and, given the large positive externality associated with widespread usage of ITNs, it would likely do so at a lesser cost per life saved.

Preparing to Manage Climate Change Financing

“…In some cases, rigorous, randomized control trials can test specifi c hypotheses about aid initiatives and policies ( 16). For example, recent experiments in Kenya found that providing free malaria bednets could save more lives than cost-sharing programs, thus overturning previously held assumptions about how to fi nance such basic interventions ( 17).…”

The impact of price on take-up and use of preventive health products

“…One study in Kenya testing the effect of prices on bednet take-up and use among pregnant women found no evidence that cost-sharing increases the likelihood that bednets end up in the hands of women who need them the most. Those who paid higher prices were no sicker than those in the comparison group, as measured by anemia status, an important indicator of malaria [5]. * The study also found that those who take the bednets for free are just as likely to use them as those who pay more (see the graph below).…”

“…For example, take-up of insecticide-treated bednets among pregnant women at antenatal care clinics in Kenya dropped by 60 percentage points (from 99 percent to 39 percent) when the price increased from zero to US$0.60 [5]-an amount that still represented a 92 percent subsidy of the US$7 market price [6]. The drop-off in purchase rate occurs even among households that could highly benefit from the product.…”

“…In the Kenya bednet study described above, researchers estimate the cost per child life saved is at best marginally lower under cost-sharing, but free distribution leads to many more lives saved [5].…”

Increasing anti-malaria bednet take-up using information and distribution strategies: evidence from a field trial in Senegal

“…This issue has notably been addressed by Cohen and Dupas (2010) in a randomised experiment on pregnant women in Kenya where it is found that the demand for ITNs is highly price sensitive and cost-sharing is not more cost-effective, in terms of child mortality, than free distribution. However, this is not the focus of our analysis.…”