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

Type Journal Article - Malaria Journal
Title Determinants of price setting decisions on anti-malarial drugs at retail shops in Cambodia
Volume 14
Issue 1
Publication (Day/Month/Year) 2015
Page numbers 224
Background: 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.
Methods: 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.
Results: 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.
Conclusions: 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.

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