Is price associated with the quality of medicines? Evidence from active pharmaceutical ingredient testing in Nigeria

Determining the quality of medicines remains a challenge, particularly in low- and middle-income countries, where regulatory oversight and enforcement vary, and resources and infrastructure for quality testing are often constrained. In these settings, price is often used as a proxy for higher-quality medicines, yet empirical evidence supporting this assumption remains scarce. We conducted a mystery shopper survey in over 1,200 retail pharmacies across urban and rural areas in the six geopolitical zones of Nigeria, purchasing one drug sample from a list of twenty branded medicines, including analgesics, antimalarials, antibiotics, antihypertensives, and multivitamins. A sub-sample of the purchased medicines (N = 246) was tested for quality, defined as passing a laboratory test using High-Performance Liquid Chromatography (HPLC) to measure the Active Pharmaceutical Ingredient (API) content of each medicine. Using probit regressions, we examined the extent to which price is associated with quality, controlling for observable pharmacy and drug sample characteristics. A 1% increase in price is associated with a 16.7 percentage point increase in the probability of passing the laboratory test, conditional on other factors. Receiver Operating Characteristic (ROC) analysis shows strong out-of-sample classification performance, with an Area Under the Curve (AUC) of 0.82 for the price-only model, indicating that price alone explains much of the variation in quality. Other results show that medicines organized by brand and displaying visible expiration dates may signal higher quality, while the presence of other observable characteristics (e.g., packaging, storage, display) shows more counterintuitive associations with drug quality in this context. Stratified analyses show that the association between price and quality is particularly strong for analgesics and antibiotics. These findings suggest that price appears to be a reliable signal of medicine quality, whereas other characteristics of pharmacies and drug samples provide weaker and less consistent indicators. This underscores the need for stronger regulatory oversight, greater market transparency, and targeted consumer education to promote safer access to quality medicines.