Saving Lives By Making Malaria Drugs More Affordable
Monday, April 6, 2015
Forty percent of all malaria-caused deaths in sub-Saharan Africa occur in the Democratic Republic of Congo and Nigeria, according to the World Health Organization. The private sector “supply chain” manages 74% of the drug volume in Congo and 98% in Nigeria where malaria-stricken patients rely on “drug shops” and other for-profit retail outlets to get life-saving medicine.
New research forthcoming in Management Science determines that the “shelf life” of malaria-fighting drugs plays a significant role in how donors should subsidize the medicine in order to ensure better affordability for patients.
New concerns over the emergence of drug resistant parasites are yet one more reason that private donors who fund malaria drug programs remain intent on making medicine available and affordable to patients. Artemisinin-based combination therapies, known as ACTs, are considered the best anti-malarial drugs but the lack of affordable ACT supplies for the poor motivates private donors to intervene and improve access.
In “Subsidizing the Distribution Channel: Donor Funding to Improve the Availability of Malaria Drugs,” Terry Taylor, associate professor, UC Berkeley’s Haas School of Business, and co-author Wenqiang Xiao, New York University’s Stern School of Business, analyzed purchase subsidies vs. sales subsidies.
Donors structure their purchase and sales subsidies per each product unit. A purchase subsidy is a discount or rebate offered to the retailer at the point of sale or when he places his order. In contrast, the retailer only benefits from a sales subsidy when he sells the product to the consumer.
- Health Care