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Analysis of prices paid by low-income countries: how price sensitive is government demand for medicines?

Srivastava, Divya and McGuire, Alistair (2014) Analysis of prices paid by low-income countries: how price sensitive is government demand for medicines? BMC Public Health, 14 (1). p. 767. ISSN 1471-2458

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Identification Number: 10.1186/1471-2458-14-767

Abstract

Background:- Access to medicines is an important health policy issue. This paper considers demand structures in a selection of low-income countries from the perspective of public authorities as the evidence base is limited. Analysis of the demand for medicines in low-income countries is critical for effective pharmaceutical policy where regulation is less developed, health systems are cash constrained and medicines are not typically subsidised by a public health insurance system Methods:- This study analyses the demand for medicines in low-income countries from the perspective of the prices paid by public authorities. The analysis draws on a unique dataset from World Health Organization (WHO) and Health Action International (HAI) using 2003 data on procurement prices of medicines across 16 low-income countries covering 48 branded drugs and 18 therapeutic categories. Variation in prices, the mark-ups over marginal costs and estimation of price elasticities allows assessment of whether these elasticities are correlated with a country’s national income. Results:- Using the Ramsey pricing rule, the study’s findings suggest that substantial cross-country variation in prices and mark-ups exist, with price elasticities ranging from -1 to -2, which are weakly correlated with national income. Conclusions:- Government demand for medicines thus appears to be price elastic, raising important policy implications aimed at improving access to medicines for patients in low-income countries.

Item Type: Article
Official URL: http://www.biomedcentral.com/bmcpublichealth/
Additional Information: © 2014 The Authors; licensee BioMed Central Ltd.
Divisions: Social Policy
LSE Health
Subjects: H Social Sciences > HC Economic History and Conditions
J Political Science > JA Political science (General)
R Medicine > RS Pharmacy and materia medica
Sets: Departments > Social Policy
Research centres and groups > LSE Health
Date Deposited: 28 Nov 2014 10:26
Last Modified: 20 Apr 2019 01:12
Funders: London School of Economics and Political Science (PhD funding)
URI: http://eprints.lse.ac.uk/id/eprint/60341

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