The Market for High-Quality Medicine: Retail Chain Entry and Drug Quality in India

Bennett, Daniel; Yin, Wesley

doi:10.1162/rest_a_00758

Cited by 29 publications

(20 citation statements)

References 64 publications

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“…In terms of price, one Indian study found that chain prices were somewhat lower than independents, although chains served wealthier clients compared to independent pharmacies (16,27). Further, it has also been shown, in India, that the entry of chains into pharmacy retail markets can lead to increased drug quality and reduced prices in existing independent retailers (16).…”

Section: Discussionmentioning

confidence: 99%

Healthcare clinic and pharmacy chains in Kenya and Nigeria: How are they regulated, and what opportunities and risks do they present to national regulatory systems?

Wafula

Onoka

Musiega

et al. 2020

Preprint

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Introduction Regulating highly fragmented healthcare markets is a major challenge in low- and middle-income countries, with compliance often very poor. We investigated market consolidation through the emergence of clinic and pharmacy chains in Kenya and Nigeria and explored the regulatory opportunities and risks that chains present. Methods The study was conducted in Nairobi, Kenya and the Federal Capital Territory, Nigeria, with chains defined as businesses with four or more establishments. Data were collected through document reviews and 26 interviews with chain operators, professional associations and regulators between September and December 2018. A thematic analysis was conducted. Results While chain clinics and pharmacies still accounted for a relatively small share of these markets, their importance was growing. We identified both organic-growth chains which had started as single business locations and gradually expanded, and investor-driven chains that used external investment capital to rapidly buy out businesses or establish new ones. In both countries, chains were regulated in an identical manner to independents, with all branches treated as independent units. Regulators neither capitalized on opportunities presented nor guarded against potential risks. The chains’ brand visibility and centralized management systems were seen as having the potential to encourage self-regulation, and improve regulatory efficiency, but regulators were not exploiting this. Potential risks identified were chains gaining excessive market power, and encouraging greater commercialization of professional healthcare, putting public health at risk. Chains tended to have regular interaction with regulators, which some feared could lead to excessive influence over the regulatory process. Conclusion As the market shares of clinic and pharmacy chains continues to rise, regulatory bodies should modify regulatory requirements and process to take advantage of chains’ brand visibility and centralized management and quality assurance systems, as well as guarding against the risks of monopolization, commercialization and regulatory capture.

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Section: Discussionmentioning

confidence: 99%

Healthcare clinic and pharmacy chains in Kenya and Nigeria: How are they regulated, and what opportunities and risks do they present to national regulatory systems?

Wafula

Onoka

Musiega

et al. 2020

Preprint

View full text Add to dashboard Cite

show abstract

“…Recent work studies the effects of increased competition in the pharmaceutical retail market. Moura and Barros (2020) studies the price effects of introducing competition in the market for OTC drugs, while Bennett and Yin (2019) studies the price and quality effects of the entry of retail chain pharmacies into a market dominated by low-quality firms. Other body of research focuses on the effects of different policies to lower drug prices, including price regulation (Mohapatra and Chatterjee, 2020), quality regulation (Atal et al, 2019) and public procurement (Dubois et al, 2019;Brugués, 2020).…”

Section: Introductionmentioning

confidence: 99%

The Economics of the Public Option: Evidence from Local Pharmaceutical Markets

et al. 2021

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We study the economic and political effects of competition by state-owned firms, leveraging the decentralized entry of public pharmacies to local markets in Chile around local elections. Public pharmacies sell drugs at a third of private pharmacy prices, because of a stronger upstream bargaining position and downstream market power in the private sector, but are also of lower quality. Exploiting a field experiment and quasiexperimental variation, we show that public pharmacies affected consumer shopping behavior, inducing market segmentation and price increases in the private sector. This segmentation created winners and losers, as consumers who switched to public pharmacies benefited, whereas consumers who stayed with private pharmacies were harmed. The countrywide entry of public pharmacies would reduce yearly consumer drug expenditure by 1.6 percent, which outweighs the costs of the policy by 52 percent. Mayors that introduced public pharmacies received more votes in the subsequent election, particularly by the target population of the policy.

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“…Recent work studies the effects of increased competition in the retail market. Moura and Barros (2020) studies the price effects of competition in the market for OTC drugs, while Bennett and Yin (2019) studies the price and quality effects of the entry of pharmacy chains in a market dominated by low-quality firms. Other research focuses on the effects of policies to lower drug prices, including price regulation (Dubois and Lasio, 2018;Dubois et al, 2019a;Mohapatra and Chatterjee, 2020;Maini and Pammolli, 2021), quality regulation (Atal et al, 2019) and public procurement (Dubois et al, 2019b;Brugués, 2020).…”

Section: Introductionmentioning

confidence: 99%

The Economics of the Public Option: Evidence from Local Phar- maceutical Markets

Cuesta¹

2021

AEA Randomized Controlled Trials

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We study the effects of competition by state-owned firms, leveraging the decentralized entry of public pharmacies to local markets in Chile. Public pharmacies sell the same drugs at a third of private pharmacy prices, because of stronger upstream bargaining and downstream market power in the private sector, but are of lower quality. Public pharmacies induced market segmentation and price increases in the private sector, benefiting the switchers to the public option but harming the stayers. The countrywide entry of public pharmacies would reduce yearly consumer drug expenditure by 1.6 percent, which outweighs the costs of the policy by 52 percent.

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The Market for High-Quality Medicine: Retail Chain Entry and Drug Quality in India

Cited by 29 publications

References 64 publications

Healthcare clinic and pharmacy chains in Kenya and Nigeria: How are they regulated, and what opportunities and risks do they present to national regulatory systems?

Healthcare clinic and pharmacy chains in Kenya and Nigeria: How are they regulated, and what opportunities and risks do they present to national regulatory systems?

The Economics of the Public Option: Evidence from Local Pharmaceutical Markets

The Economics of the Public Option: Evidence from Local Phar- maceutical Markets

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