Economics of prescription of medicines in Pakistan; market failure or executive decision. Points to ponder for improving prescription practices.

Abstract

The laws of economics oversee the interplay between
price of a commodity and how prices affect the demand
of that commodity. A logical condition is assumed while
studying the impact of price on demand, which believes
that “everything else must remain constant”. However, in
a real-world scenario there is no such thing as “constant”.
It’s an ever-changing world and there are so many
variables to consider while making any assumption.
Healthcare market is unique in the sense that no other
market has so much difference in the knowledge of client
(patient) versus the supplier (doctor). This difference
creates another phenomenon, called “supplier-induceddemand”
where the client must follow all the instructions
of the supplier diligently. This phenomenon not only
creates the demand of prescribing physician (number of
visits, follow ups) but also it generates the demand of
other players in healthcare market. The physician may ask
clients to purchase any medicine, or a specific brand of
the medicine, get tests done from a specific diagnostic
centre or seek admission in a specific health facility for
treatment or surgery. This makes healthcare market
highly imperfect and creates failures in some of the basic
assumption of economics.¹ Given the nature of healthcare
clients, coming to seek health, mostly in a life-or-death
situation, assumption of rational decision making may not
also hold true. These patients or their relatives are willing
to do anything to alleviate pain and suffering and to save
their lives or the lives of their loved ones. In such a
condition there are chances of market failure when
supplier has greatest advantage over the consumer and
can make the market shift towards supplier’s own
benefits. Even if the notion of ethical practice by physician
is believed to be normal, there are conditions where huge
market imperfections result in supplier-driven-demand in
vogue.²

Continued..