Who Benefits from Pharmaceutical Price Controls? Evidence from India

Abstract

This study examines the impacts of pharmaceutical price controls in a middle-income country setting, focusing on an implementation of pharmaceutical price ceilings in India. It finds that price controls led to declining prices for directly-impacted and competing products and increased market share for highquality products. However, after price controls were implemented, low-priced firms were more likely to exit price-controlled markets and sales of price-controlled products declined in markets with stronger price controls. The benefits of the legislation were largest for quality-sensitive consumers, while the downsides largely affected poor and rural consumers, two groups already suffering from low access to medicines.

Keywords: Pharmaceutical Industry, price controls, India