Health, Competition and Politics: Public Pharmacies in Local Markets

Better and more affordable health products and services are a main objective of many development initiatives, yet concrete ways to achieve them are still highly debated around the world. This project examines evaluates the impact of public pharmacies on the affordability of drugs in Chile. While three private companies control 95% of the market for drugs in the country and have colluded to increase prices, public pharmacies have recently opened with the stated goal of offering more affordable products. Researchers evaluate the extent to which public pharmacies improve consumer welfare and are used for political purposes, such as vote buying. For the first prong, price comparisons are made before and after the opening of public pharmacies at different times in order to control for unobservable variables. To test for political misuse, prices of medicinal drugs are compared across public and private pharmacies weekly before and after upcoming local elections. Results forthcoming.