To prescribe or not to prescribe: On the regulation of pharmaceuticals in less developed countries

An important source of failure in markets and justification for government intervention in the health sector of LDCs is imperfect information. Pharmaceutical use is one area in which widespread problems have been noted [1,2] with substantial misuse, improper diagnosis and problems of compliance noted among both the population at large and health care providers, presumably due to a lack of information concerning appropriate use. One possible instrument vis-a-vis the regulation of pharmaceuticals in LDC's (and in developed countries as well) is the decision by public health officials to make a particular drug available over the counter (OTC) to consumers or to require a prescription from a licensed professional. The choice is one of balancing two competing risks. On the one hand, allowing self-prescription by the consumers who do not have medical training risks gross errors of diagnosis and mistaken prescriptions with possibly serious health consequences. On the other hand, requiring the intervention of a skilled professional runs the risk that the patient does not receive the appropriate, potential life saving, drug at all. With medical personnel in very short supply in many parts of the developing world, the real cost (including travel time and expense) of visiting licensed medical facilities can be prohibitively high. This paper presents a very general methodology for evaluating the tradeoff between these competing risks. The problem can be considered one of determining the value of information (in the form of a more accurate diagnosis through the intervention of a skilled professional) as a particular (and costly) mechanism for obtaining this information. The model presented here identifies the information needed to answer the question concerning this regulatory issue with illustrative examples. Further, the model provides some guidance in related issues for the determination of an appropriate level of training to be required for professionals and the evaluation of projects to improve public access to information on the use of drugs.