Working Paper: CEPR ID: DP9114
Authors: Martina Björkmannyqvist; Jakob Svensson; David Yanagizawa-Drott
Abstract: Counterfeit and sub-standard antimalarial drugs present a growing threat to public health. This paper investigates the mechanisms that determine the prevalence of fake antimalarial drugs in local markets, their effects, and potential interventions to combat the problem. We collect drug samples from a large set of local markets in Uganda using covert shoppers and employ Raman spectroscopy to test for drug quality. We find that 37 percent of the local outlets sell fake antimalarial drugs. Motivated by a simple model, we conduct a market-level experiment to test whether authentic drugs can drive out fake drugs from the local market. We find evidence of such externalities: the intervention reduced prevalence of substandard and counterfeit drugs in incumbent outlets by half. We also provide suggestive evidence that misconceptions about malaria lead consumers to overestimate antimalarial drug quality, and that opportunistic drug shops exploit these misconceptions by selling substandard and counterfeit drugs. Together, our results indicate that high quality products can drive out low quality ones, but the opposite is true when consumers are less able to infer product quality.
Keywords: act; asymmetric information; counterfeit medicine; field experiment; malaria
JEL Codes: D83; I15; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of community health promoters selling authentic ACT drugs (L65) | reduction in the prevalence of fake drugs in local markets (D18) |
| presence of high-quality products (L15) | drive out low-quality ones (L15) |
| lower prices charged by the CHPs (R48) | increased demand for ACT medicines (I11) |
| quality of products available in the market (L15) | consumer behavior in treatment decisions for children reported sick with malaria (D19) |
| misconceptions about malaria (F24) | weaken reputational incentives for drug shops to maintain high quality (L15) |