From Courts to Markets: New Evidence on Enforcement of Pharmaceutical Bans in India

33 Pages Posted: 6 Aug 2019

See all articles by Chirantan Chatterjee

Chirantan Chatterjee

Indian Institute of Management, Ahmedabad

Debi Prasad Mohapatra

University of Massachusetts, Amherst

Manuel Estay

University of Massachusetts Amherst

Date Written: August 2, 2019

Abstract

Regulatory enforcement of product safety standards given health concerns, whether it is in romaine lettuce, smartphones or cars, is emerging to be a challenge for global public health. This is particularly true for developing economies with fragile institutions. In this context, recent studies on Indian pharmaceutical markets provide evidence suggesting that the sector is a hub for substandard quality of medicines. Departing from these prior studies which use randomly collected samples, we reinvestigate this question using novel pan-India market sales data of banned medicines from 0.75 million pharmacists and chemists in India. We find that indeed such medicines get sold in India even after bans are imposed on them in the period 2007 to 2013. However, there is a general decline in demand post ban for our focal molecules suggesting broad adherence to bans. We also observe regional heterogeneity in prevalence of banned medicines sold between rich and poor regions of India with the former counterintuitively showing more sales. That said, while Ozawa et al (2018) argue that prevalence of substandard medicines is around 13% in low and middle-income countries, we find an infringement ratio which is more muted in India at about 5%. Finally, a regression-based examination suggests that prior firm presence in therapeutic markets and popularity of molecules positively impact the likelihood of sale of banned medicines in India. Our results are robust to alternative explanations and are substantiated with a theoretical set up examining firm trade-offs in the decision to infringe. India has recently been under the lens of the global access to medicines debate and our findings have important policy implications for global health.

JEL Classification: I10

Suggested Citation

Chatterjee, Chirantan and Mohapatra, Debi Prasad and Estay, Manuel, From Courts to Markets: New Evidence on Enforcement of Pharmaceutical Bans in India (August 2, 2019). Available at SSRN: https://ssrn.com/abstract=3431046 or http://dx.doi.org/10.2139/ssrn.3431046

Chirantan Chatterjee (Contact Author)

Indian Institute of Management, Ahmedabad ( email )

Vastrapur
Ahmedabad, Gujarat 380 015
India

HOME PAGE: http://https://www.iima.ac.in/web/faculty/faculty-profiles/chirantan-chatterjee

Debi Prasad Mohapatra

University of Massachusetts, Amherst ( email )

Department of Resource Economics
Amherst, MA MA 01003
United States

HOME PAGE: http://https://sites.google.com/a/cornell.edu/debi-prasad/

Manuel Estay

University of Massachusetts Amherst ( email )

Department of Operations and Information Managemen
Amherst, MA 01003
United States

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