The Human Cost of Collusion: Health Effects of a Mexican Insulin Cartel

Abstract

Despite recent attention to the role of competition in determining health outcomes in developed nations, little is known about how market power impedes access to quality care in lower-income countries. This paper studies the effects of policy changes that stopped collusion among firms supplying insulin to one of Mexico’s largest health care providers. I document increased insulin utilization and decreased diabetes complications and mortality following the sudden drop in insulin prices caused by the cartel’s collapse. These adverse health outcomes expand the assessment of damages caused by the cartel. The findings highlight the importance of market design policies in health markets, particularly for low- and middle-income countries.