Determinants of price setting decisions on anti-malarial drugs at retail shops in Cambodia.


Patouillard, E; Hanson, K; Kleinschmidt, I; Palafox, B; Tougher, S; Pok, S; O'Connell, K; Goodman, C; (2015) Determinants of price setting decisions on anti-malarial drugs at retail shops in Cambodia. Malar J, 14 (1). p. 224. ISSN 1475-2875 DOI: 10.1186/s12936-015-0737-9

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Abstract

In many low-income countries, the private commercial sector plays an important role in the provision of malaria treatment. However, the quality of care it provides is often poor, with artemisinin combination therapy (ACT) generally being too costly for consumers. Decreasing ACT prices is critical for improving private sector treatment outcomes and reducing the spread of artemisinin resistance. Yet limited evidence exists on the factors influencing retailers' pricing decisions. This study investigates the determinants of price mark-ups on anti-malarial drugs in retail outlets in Cambodia. Taking an economics perspective, the study tests the hypothesis that the structure of the anti-malarial market determines the way providers set their prices. Providers facing weak competition are hypothesized to apply high mark-ups and set prices above the competitive level. To analyse the relationship between market competition and provider pricing, the study used cross-sectional data from retail outlets selling anti-malarial drugs, including outlet characteristics data (e.g. outlet type, anti-malarial sales volumes), range of anti-malarial drugs stocked (e.g. dosage form, brand status) and purchase and selling prices. Market concentration, a measure of the level of market competition, was estimated using sales volume data. Market accessibility was defined based on travel time to the closest main commercial area. Percent mark-ups were calculated using price data. The relationship between mark-ups and market concentration was explored using regression analysis. The anti-malarial market was on average highly concentrated, suggesting weak competition. Higher concentration was positively associated with higher mark-ups in moderately accessible markets only, with no significant relationship or a negative relationship in other markets. Other determinants of pricing included anti-malarial brand status and generic type, with higher mark-ups on cheaper products. The results indicate that provider pricing as well as other key elements of anti-malarial supply and demand may have played an important role in the limited access to appropriate malaria treatment in Cambodia. The potential for an ACT price subsidy at manufacturer level combined with effective communications directed at consumers and supportive private sector regulation should be explored to improve access to quality malaria treatment in Cambodia.

Item Type: Article
Faculty and Department: Faculty of Public Health and Policy > Dept of Global Health and Development
Faculty of Epidemiology and Population Health > Dept of Infectious Disease Epidemiology
Research Centre: Antimicrobial Resistance Centre (AMR)
Malaria Centre
Tropical Epidemiology Group
PubMed ID: 26024880
Web of Science ID: 355793400001
URI: http://researchonline.lshtm.ac.uk/id/eprint/2197037

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