Pooled procurement of drugs in low and middle income countries

We use data from seven low and middle income countries with diverse drug procurement systems to assess the effect of centralized procurement on drug prices, and provide a theoretical mechanism that explains this effect. Our empirical analysis is based on exhaustive data on drug sales quantities and expenditures over three years for forty important molecules. We find that centralized procurement of drugs by the public sector leads to lower prices but that the induced price reduction is smaller when the supply side is more concentrated. (C) 2021 Elsevier B.V. All rights reserved.

Automated summary

This study utilized data from seven low and middle income countries to assess the impact of centralized drug procurement on drug prices, and provided a theoretical mechanism to explain this effect. The findings suggest that centralized procurement by the public sector leads to lower drug prices, but the reduction in prices is smaller when the supply side is more concentrated.