Poor Quality Drugs and Global Trade: A Pilot Study

Experts claim that some Indian drug manufacturers cut corners and make substandard drugs for markets with non-existent, under-developed or emerging regulatory oversight, notably Africa. This paper assesses the quality of 1470 antibiotic and tuberculosis drug samples that claim to be made in India and were sold in Africa, India, and five mid-income non-African countries. We find that 10.9% of those products fail a basic assessment of active pharmaceutical ingredients (API), and the majority of the failures are substandard (7%) as they contain some correct API but the amount of API is under-dosed. The distribution of these substandard products is not random: they are more likely to be found as unregistered products in Africa than in India or non-African countries. Since this finding is robust for manufacturer-drug fixed effects, one likely explanation is that Indian pharmaceutical firms and/or their export intermediaries do indeed differentiate drug quality according to the destination of consumption.