Can Good Products Drive Out Bad? A Randomized Intervention of Antimalarial Medicine Market in Uganda

Out­line

Malar­ia con­tin­ues to be one of the ma­jor killer-dis­eases in Africa, de­spite ex­is­tence of ef­fec­tive pre­ven­tion meth­ods and ef­fec­tive cures. While the rea­son for this pub­lic health fail­ure is like­ly to be mul­ti­fac­eted, re­cent ev­i­dence from re­tail mar­kets for Artemisinin-based Com­bi­na­tion Ther­a­py (ACT) drugs sug­gest that poor qual­i­ty of the med­i­cine is one im­por­tant fac­tor.

An­ti­malar­i­al med­i­cine is an ex­pe­ri­ence good, mean­ing that con­sumers ob­serve nei­ther the qual­i­ty of the med­i­cine sold nor the util­i­ty it will yield be­fore pur­chase. Learn­ing about qual­i­ty thus has to be based on health ex­pe­ri­ence af­ter pur­chase and treat­ment. How­ev­er, be­cause malar­ia mim­ics sev­er­al oth­er dis­eases – both in ini­tial symp­toms and in signs of se­vere ill­ness – and be­cause symp­to­matic di­ag­no­sis rather than par­a­site-based di­ag­nos­tic test­ing is the norm in most of Africa, mis­di­ag­no­sis is com­mon. Mis­di­ag­no­sis, in turn, is like­ly to ham­per learn­ing about both the ef­fec­tive­ness of ACTs and their qual­i­ty.

Fight­ing the sell­ing of fake ACTs

Can the en­try of a re­tail­er sell­ing high qual­i­ty med­i­cine af­fect the mar­ket equi­lib­ri­um in such an en­vi­ron­ment and if so how? We in­ves­ti­gate this ques­tion us­ing data from a ran­dom­ized con­trolled tri­al, em­bed­ded with­in the scale-up of a new health de­liv­ery pro­gram in Ugan­da. We iden­ti­fy two mech­a­nisms that can im­prove the mar­ket equi­lib­ri­um: Exit of in­cum­bent drug shops sell­ing poor qual­i­ty and a shift to high­er qual­i­ty drugs by out­lets re­main­ing. We find that the re­duced form treat­ment ef­fects are large: Ap­prox­i­mate­ly a year af­ter the new mar­ket ac­tor en­tered the share of in­cum­bent firms sell­ing fake ACTs dropped by more than 50 per­cent in the in­ter­ven­tion com­pared to the con­trol group.

These re­sults have clear pol­i­cy im­pli­ca­tions. The neg­a­tive pro­duc­tiv­i­ty con­se­quences of weak in­cen­tives for build­ing rep­u­ta­tion are quite clear. Thus, un­der­stand­ing the fea­si­bil­i­ty and cost-ef­fec­tive­ness of al­ter­na­tive in­ter­ven­tions to im­prove rep­u­ta­tion-build­ing mech­a­nisms in these mar­kets are im­por­tant from a pol­i­cy­mak­ing per­spec­tive, and to this end more re­search is need­ed.

Re­search Team

Author

David Yanagizawa-Drott

Professor of Development and Emerging Markets

Zurich ZCED

Mar­ti­na Bjo­erk­man-Nyqvist

Stock­holm Uni­ver­si­ty

Jakob Svens­son

IIES, Stock­holm Uni­ver­si­ty