- The income elasticity of drug prices with respect to mean per capital income is 0.27 for the full range of countries, and only 0.10 in MLICs, implying that the poorest countries face the highest prices relative to income
- Income inequality in MLICs further undermines the relationship between drug prices and per capita income
- Generics are priced roughly 30% lower than originators on average, but the variance is large, and this could reflect poorer quality. Generic competition only weakly affects prices (an additional retail generic competitor reduces prices by <1%). These findings plausibly reflect generic quality uncertainty leading to competition on brand rather than price.
- Tendered procurement significantly reduces originator and generic prices by 42.4% and 35%, compared with their respective retail pharmacy prices. The authors suggest this is because (i) it imposes quality standards that attract multi-national generic suppliers and (ii) originators may be more willing to grant discounts as this channel is less prone to price spillovers to other countries.
Posted in Competition, Emerging Markets, Pricing and Reimbursement | Tagged External publications