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 nonexistent, underdeveloped, or emerging regulatory oversight, notably Africa. This paper assesses the quality of 1,470 antibiotic and tuberculosis drug samples in solid oral form (tablet or capsule) 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 percent of those products fail a basic assessment of active pharmaceutical ingredients (API), and the majority of the failures are substandard (7 percent) as they contain some correct API but the amount of API is underdosed. 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. Moreover, our finding is robust for manufacturer-drug fixed effects, and is unlikely to be explained by differences in storage conditions as the five Indian cities in our sample are on average more likely to have high temperatures, above 25°C or 30°C, than the other African or non-African cities. A more likely explanation is that Indian pharmaceutical firms and/or their export intermediaries differentiate drug quality according to the destination of consumption.