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In Whom We Trust: The Role of Certification Agencies in Online Drug Markets

Author

Listed:
  • Bate Roger

    (Department of Economics, American Enterprise Institute, Washington, DC, USA)

  • Jin Ginger Zhe

    (Department of Economics, University of Maryland, College Park, MD, USA)

  • Mathur Aparna

    (American Enterprise Institute, 1150 Seventeenth Street, Washington, DC 20036, USA)

Abstract

This article uses an audit sample and a consumer survey to study the intriguing market of online prescription drugs facing US customers and assesses the role that certification agencies play in online drug markets.On the supply side, we acquire samples of five popular brand-name prescription drugs from three types of online pharmacies: tier 1 are US-based and certified by the National Association of Boards of Pharmacy (NABP) or LegitScript.com, tier 2 are certified by PharmacyChecker.com or the Canadian International Pharmacy Association but not by NABP or LegitScript, and tier 3 are not certified by any of the four agencies. Most tier-2 and tier-3 websites are foreign. We find that 37 of the 365 delivered samples are different from the products we ordered and, therefore, non-testable. Conditional on testable samples, Raman spectrometry test finds no failure of authenticity except for eight Viagra samples from tier-3 websites. After controlling for testability and authenticity, tier-2 websites are 49.2% cheaper (p

Suggested Citation

  • Bate Roger & Jin Ginger Zhe & Mathur Aparna, 2014. "In Whom We Trust: The Role of Certification Agencies in Online Drug Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(1), pages 111-150, January.
    • Handle: RePEc:bpj:bejeap:v:14:y:2014:i:1:p:111-150:n:2
    DOI: 10.1515/bejeap-2013-0085
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    More about this item

    Keywords

    prescription drugs; counterfeit; online pharmacy; price; certification;
    All these keywords.

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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